Chicago Daily Observer

High exports, booming consumer spending, and a retreat in gasoline purchases added up to a doubling of US Economic Growth in the second quarter of 2008.

For the quarter ending June 30, economic growth was measured at a 1.9% annual rate, marking over 17 consecutive years without the United States being in recession.

U.S. exports rose by 9.2%. Imports decreased 6.6%, marking a historic shift in US Trade balance.

Contrasting the economic results with the media coverage:

Jeannie Aversa at the AP tells us in the Tribune that the Economic rebound not as energetic as hoped in spring.

“We’re in a recession,’’ Allen Sinai, chief economist at Decision Economics Inc. in New York, said in a Bloomberg ... Read More...

“In serious consideration for ambassador to Belarus.” That’s the role John McCain joked that former senator Phil Gramm might have in a McCain administration. Gramm is McCain’s most senior economic adviser, the one best qualified to lead the finance team of a McCain presidency. Now, however, Gramm faces political exile because he made the mistake of telling the truth.

What prompted the abrupt demotion? The short answer is what might be called Campaign Econ. Campaign Econ says the American economy is a certain way because Americans think it is. Campaign Econ competes with real economics and often wins

If Phil Gramm can upset both Sen. Obama and John McCain, he must be doing something right.

Seven consecutive years of quarterly economic growth is not a recession;it is an near miracle given the rising cost of commodities and an expensive war in Iraq. Yet for having the audacity to point out something that has been pointed out here in the Chicago Daily Observer numerous times (The United States is not in a recession), Phil Gramm is taunted by the most economically backwards candidate since William Jennings Bryan (Sen. Obama) and chastised by Gramm’s theoretically free-market boss, Sen. McCain.

Yet the media whines daily about economic doom and gloom, and certainly on an individual level, there are always some problems with the economy. However the severity of these problem is minor when compared with the tanking after 9/11 or the downturn in the early 1990’s. Historically low unemployment, low inflation, ... Read More...

Phil Gramm expects Mr. McCain to inherit a sluggish economy if he wins the presidency, weighed down above all by the conviction of many Americans that economic conditions are the worst in two or three decades and that America is in decline.

“You’ve heard of mental depression; this is a mental recession,” he said, noting that growth has held up at about 1 percent despite all the publicity over losing jobs to India, China, illegal immigration, housing and credit problems and record oil prices. “We may have a recession; we haven’t had one yet.”

“We have sort of become a nation of whiners,” he said.

A funny thing happened on the way to the most predicted recession in US history: it didn’t happen.
The theory behind the widespread recession forecast was that the declining value of US homes, the shrinking amount of mortgage equity withdrawal, or a credit squeeze would lead to either a severe slowdown or outright decline in consumer spending. Prominent economists – including one Nobel Prize winner – made comparisons to the Great Depression, predicting a long and deep downturn. Alan Greenspan declared a recession was likely and said this was the worst financial crisis since the end of World War II.
Trouble is, someone forgot to convince consumers they had to stop spending. Despite consumer confidence readings that are downright awful, “core” retail sales are up at a 10.2% annual rate in the past three months. In other words, consumer confidence statistics may express how people feel, but not ... Read More...

Back in 1979, before GDP growth had turned negative, Alfred Kahn, President Carter’s Chief Economist made a professional faux pas. He uttered the “R” word within earshot of the national press. Higher-ups in the White House quickly put the hammer to Dr. Kahn, suggesting that he never use the “R” word again.
To his credit, Alfred Kahn did not back down. He announced that from then on he would refer to the recession as a “banana.” He then began to say things like, “I think we are in for a serious banana.” He was funny, and he was right.
Twenty-one years later, in December 2000, Vice President-Elect Richard Cheney, told Tim Russert on Meet the Press that the US was probably on the “front edge of a recession.” At the time, GDP growth was still positive and most economists felt a recession was highly unlikely.
... Read More...