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How Can So Many Smart People Really Blame a 3% GDP Drop on the Weather?

BEGIN TRANSCRIPT

RUSH: And it just continues. Every day you take a look at what's happening in the news, you just don't believe it. You don't believe what's happening. You don't believe what people are saying about it. Some of you, I'm sure, are starting to question your own sanity. I, of course, never do that, but some of you no doubt are. And none of it makes any sense out there.

The number of people who actually say that the weather is why we had a 3% contraction -- 3% is historic! It's not coincidental, accidental. It's not a blip. It's historic. A 3% contraction in the economy: "Nothing to see here. It was just the cold weather." I mean, there's some otherwise smart people, or people we're told are smart, saying that.

BREAK TRANSCRIPT  

RUSH: As you know, ladies and gentlemen, we like Kirsten Powers, who is an infobabe on Fox.  Kirsten Powers, she's extremely bright, she's objective, and she's very fair.  And that's why I'm puzzled by this next sound bite.  This was last night, Special Report with Bret Baier, and they were talking about the economy and the latest polling numbers.  Bret Baier said to Kirsten Powers, "You take a look at the latest Fox poll, the president on the economy, 38% approve, 59% disapprove."

POWERS:  As bad as these numbers are, you don't hear any serious economists talking about us going back into a recession.  You saw how Wall Street responded to this, which is really to not respond.  So I think that there are a lot of economists who just see this as an aberration, something that is the result of bad weather.  It's possible health care spending could have something to do with it, but they mostly see bad weather as being the primary problem, and there's been a lot of comparisons to the last time this happened in 2009.  However, we have to remember that we lost millions of jobs then, and we added hundreds of thousands of jobs this time.

RUSH:  Now, this just doesn't jibe.  In the first place, she's talking about the 3% contraction of the economy in the first quarter.  It didn't happen in 2009.  It's the first time it's happened since they started keeping such data.  This is historic.  There hasn't ever been a 3% contraction.  The truth of the matter is, ladies and gentlemen, we never got out of the recession.  They might be able to have a formulaic way of measuring recession versus growth and depression, the number of quarters in a row where the economy doesn't grow.

The fact of the matter is, we're not producing the kind of jobs that lead people into the job market with vigor.  They're not the kind of jobs that lead to careers.  Entrepreneurism is taking a hit.  There really isn't any significant, quality job creation going on.  And it's getting even worse because of the influx of illegals crossing the border now.  There hasn't been any serious reaction from serious economists, so this is a one-off.  "The economy, I mean, you look at recent numbers, the economy is actually doing quite well right now." The economy hasn't been doing well in six years. 

We would all be wise to remember that Obama changed the way the GDP is measured last year so that it would not reflect as poorly on him as it really is.  They changed the definition for calculating the gross domestic product as a means of lessening the political impact on him.  And, in fact, the new way of calculating the GDP, a bunch of economists said the end result of that new calculation would add up to 3% to the GDP.  Now, I can't spell out the calculation, the formula is complicated, but I can tell you that no other Western country defines economic growth the new way that we do. 

All I can tell you is that when George W. Bush was president and the economy was growing at 3.3, the Drive-By Media was screaming and yelling and shouting, "Recession, depression, doom, gloom" with every newscast.  Here we have the first news we had in the first quarter was down one-tenth of 1%.  Then the next revision we got it was worse than that.  Now it was actually minus 3%, a contraction, but it doesn't mean anything because no serious economists think so, it was a one-off. 

The weather?  I have here a post at ZeroHedge.com.  The headline here, "It Turns Out That the 'Harsh Weather' is Actually Boosting the Economy -- Something curious happened earlier today: January spending - which will be part of Q1 GDP - soared, which, as we reported earlier, was entirely on the back of a record monthly surge in spending on services, while spending on goods, both durable and non-durable, dropped. The record January spending can be seen on the chart below." 

This is back on June 3rd.  This story is three weeks ago.  And three weeks ago they looked at spending in the first quarter, before this 3% drop was reported this week, three weeks ago they were looking at the spending, and they were thinking that spending in the first quarter was really pretty good, it was going through the roof, in fact, and they were chalking it up to the weather. 

"The good news: since GDP is driven by spending of any kind -- be it good or bad -- in the first month of the quarter, the 'harsh winter weather' actually had a very positive impact on GDP, which as a result of the surge in spending, will now have a higher number in the BEA's bean counting models. As will Obamacare."

So three weeks ago -- and, by the way, this site, if it tends any direction, tends conservative -- three weeks ago analysis of spending in the first quarter GDP was high.  And they were expecting an upward revision of economic growth.  And the weather was cold.  And they were chalking it up, harsh weather, because of the spending, because of the spending numbers, they concluded the harsh weather actually was helping the economy. 

Now it's three weeks ago later, and the number actually came out that the economy contracted at 2.9% even with this spending.  Well, then you add to it Obamacare spending, and then you find out that spending takes the place of private sector spending, there's no good news here.  And it's not a one-off.  It is a trend. It's a warning sign, and the fact that nobody wants to see this is proof positive of how politicized virtually every bit of this is.

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