Economic Schizophrenia

The real news today is not how the U.S. GDP lost 2.9% in Q1, but rather the seemingly delusional explanations for it, along with data that makes sense only to those having hallucinations of a great economy.

The explanation is (by consensus) that it was a “rough winter” for the economy. And in the same headlines, analysts are saying that it was because people aren’t spending as much on health care. What does health care expenses have to do with the weather? No one can say for sure.

What’s worse is that President Obama’s Director of National Economic Council is projecting a 4.0+% GDP growth next quarter (video) “just because.” Well, not really “just because,” but in his words, because everything else in the economy is just humming along; in other words, staying the same. Somehow, not only will the economy recover its losses, but it will gain an extra 2% “just because.”

When was the last time the economy grew 4% in ONE quarter? “Never” would be an accurate time frame – at least since real GDP has been measured:

Quarterly GDP

So what does that look like for average, everyday folks? To see a 4% increase in ONE quarter, a lot of things have to happen. At the very least, Personal Consumption has to increase, or show signs of increasing. Commercial credit has to unfreeze. Marginally employed workers have to become less “marginal” (U6). There are other indicators that need to happen, but these are the basics. And here’s what that looks like now:


It would indeed be a historical moment to see a 4% increase in quarterly GDP with absolutely no economic indicators to suggest such an Earth moving event.

For the everyday person, that basically means that with or without the Wall Street delusional hallucinations, everything will pretty much stay the same – crappy. For everyone else, they will “revise” numbers again next quarter to make themselves feel better about their schizophrenia.

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