This was lower than analysts were anticipating, and it marks the third time in a row that the GDP number has declined compared to the previous quarter.
In other words, GDP growth has been declining for close to a year now, and this lines up perfectly with what I have been saying about how the second half of last year was a turning point that plunged us into the early chapters of a brand new economic crisis.
And as you will see below, the official GDP number is highly manipulated, and the way that it is calculated has been changed numerous times over the years.
So the bad number that is being reported by the government is actually the best case scenario.
Of course many of the “experts” being quoted by the mainstream media are saying that this is just a temporary blip and that good times for the U.S. economy are right around the corner. For instance, check out this quote from Reuters…
“The economy essentially stalled in the first quarter, but that doesn’t mean it is faltering,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. “Some of the restraints to growth are dissipating. Growth is likely to accelerate going forward.”
We have been told this same story for years, but the “acceleration” has never materialized. In fact, Barack Obama is poised to become the only president in U.S. history to never have a single year when the economy grew by more than 3 percent during his presidency.
That is a statistic that is hard to believe, but it is true.
In addition, Louis Woodhill has pointed out that the average rate of U.S. economic growth during the Obama years will be the fourth worst in recorded history…
Assuming 2.67% RGDP growth for 2016, Obama will leave office having produced an average of 1.55% growth. This would place his presidency fourth from the bottom of the list of 39*, above only those of Herbert Hoover (-5.65%), Andrew Johnson (-0.70%) and Theodore Roosevelt (1.41%)
So does anyone out there still believe that there has been an “Obama recovery”?
We also need to add another layer to our analysis. By now, everyone should realize that the official GDP number is highly manipulated, and the way that GDP is calculated has been changed many, many times over the years.
For example, here is Peter Schiff commenting on changes that were made in 2013…
The latest example of this was revealed earlier this week when the Bureau of Economic Analysis (BEA) announced new methods of calculating Gross Domestic Product (GDP) that will immediately make the economy “bigger’ than it used to be. The changes focus heavily on how money spent on research and development (R&D) and the production of “intangible” assets like movies, music, and television programs will be accounted for. Declaring such expenditures to be “investments” will immediately increase U.S. GDP by about three percent. Such an upgrade would immediately increase the theoretic size of the U.S economy and may well lead to the perception of faster growth. In reality these smoke and mirror alterations are no different from changes made to the inflation and unemployment yardsticks that for years have convinced Americans that the economy is better than it actually is.
And the following originally comes from a Bloomberg article which discussed changes that were made in 2015…
The way some parts of U.S. gross domestic product are calculated are about to change in the wake of the debate over persistently depressed first-quarter growth.
In a blog post published Friday, the Bureau of Economic Analysis listed a series of alterations it will make in seasonally adjusting data used to calculate economic growth. The changes will be implemented with the release of the initial second-quarter GDP estimate on July 30, the BEA said.
One of the changes that was made last year was intended to artificially boost GDP growth numbers for the first quarter of each year.
So without that artificial boost, what would the real number for the first quarter of 2016 look like?
John Williams of shadowstats.com tracks what the official government numbers would be if honest numbers were actually being used, and according to him U.S. GDP growth has been continuously negative since 2005.
But we certainly can’t have the press report those sorts of things. If that were the case, then everyone would be talking about the “economic depression” that never seems to end.
Unfortunately, the truth is that we are in the midst of a long-term economic decline, and we can see evidence of this all around us.