We’ve been warning about it since the beginning of this crisis – that consumers are simply not interested in spending money they don’t have. In the first quarter of 2011 the government attempted to convince us that the economy was growing at a slow, but steady, rate of 1.8%. This was used as evidence the economic recovery had taken hold.
President Obama and his administration specifically told us that a depression had been avoided:
We can safely say that we are no longer facing the potential collapse of our financial system and we’ve avoided the depression many feared.
President Barrack Obama – December 9, 2009
But today’s growth domestic product revisions suggest otherwise.
That 1.8% that convinced the average uninformed American economic activity had increased was nothing but a fabrication – a bold faced lie – and that’s official. The government revised that number to 0.4% – a significant difference. They were only off by about 75%.
Today, the government released it’s second quarter GDP numbers, and as was predicted in many alternative media circles, it’s a clear indication that things are turning for the worse. Karl Denninger weighs in:
Sorry guys, the clock has rung. It’s not ringing any more, it has rung and the spring-powered alarm has run out.
There is no recovery to speak of.
Four years into this the policies of the government and Fed have failed.
It gets worse:
“The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 3.2 percent in the second quarter, compared with an increase of 4.0 percent in the first Excluding food and energy prices, the price index for gross domestic purchases increased 2.6 percent in the second quarter, compared with an increase of 2.4 percent in the first.”
(source: US Dept. of Commerce)
Your standard of living is being shredded.
“Real personal consumption expenditures increased 0.1 percent in the second quarter, comparedwith an increase of 2.1 percent in the first.”
(source: US Dept. of Commerce)
Spending has effectively collapsed.
This puts into stark relief the reality of the government deficit spending – it is doing nothing more than covering up an economic Depression, and the so-called “exit plan” – that private consumption, investment and borrowing will “take the baton back” is not working.
Some analysts – those who are either in the tank for the government or are completely ignorant to the real facts – will claim that while the second quarter GDP is low, it’s still positive, which suggests there’s still growth.
As we have pointed out in several reports previously, this is simply not the case once you factor in price inflation and monetary easing:
Note that they have the CPI at 10%. If we use that to convert nominal GDP to actual GDP, then we get big negative economic growth. In other words, the reported GDP growth is just price increases.
If it wasn’t clear up until today, it should be now. Nothing the government tells us can be trusted. They will say anything and do anything to avoid panic. But despite their “best” efforts they cannot stop the inevitable. Rest assured, panic is coming.