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While gross domestic product is a
deeply flawed measuring tool, it remains one of the key gauges of a nation's economic health. And although we've now seen seven straight quarters of GDP growth, today's
news from the Commerce Department on that score is not encouraging. In the first quarter, GDP grew a weak 1.8 percent. That number is subject to two revisions as a more complete picture of what was going on in the first three months of the year becomes available.
Better than a poke in the eye with a sharp stick. Better than the five quarters of GDP contraction during the recession. But definitely not where we need to be if there is to be any chance of creating jobs at the rate necessary to really put Americans back to work. In that crucial arena, there was more disappointing news released this morning. The Department of Labor said initial claims for unemployment benefits rose sharply, and the four-week running average that provides a better overall picture of such claims climbed above 400,000 again. Better than last year at this time, and better by far than in 2009, when such claims were running above 600,000 week after week. Moreover, today's announcement is just one week of many in what all but the most optimistic analysts have said would be a "choppy" economic recovery.
In short, one more round of economic "on the other hand."
Whether today's announcements turn out to be just potholes on recovery road, as Ben Bernanke and the Federal Reserve's Open Market Committee seemed to be suggesting in Wednesday's statements and press conference, remains to be seen.
The unemployment claims number is always volatile. It's the trend that matters, and that has been slowly but steadily downward for several months until this month. Beyond the GDP headline number, in the specifics that make up that measurement, there are glimmers of better things to come. And while the Fed has revised its GDP projections downward for the next three years, it also has revised its projection of the unemployment rate downward. However, its best case scenario?7.6 percent for 2012?can only be viewed with foreboding from both an economic and political perspective. There is a good possibility that the rate will be above 8 percent on election day.
What that means from the human perspective is that we will still have millions of unemployed, millions more of underemployed and millions more who have dropped out of the labor force altogether, not because they retired to sunny beaches somewhere, but rather because they gave up looking for what they could not find, a job, or at least one capable of paying the bills. This is disastrous. Right now, 40 months after the recession began, and 22 months after the National Bureau of Economic Research says it ended, we still have a terrible jobs situation that the current 8.8 percent official unemployment rate only partially measures.
Large numbers of rank-and-file Americans are suffering and there is zero chance the 112th Congress will approve any measure to stimulate the economy other than diddling the top 5 percent with another round in the half-century series of tax cuts for that demographic. Yet, as Joan McCarter points out today, the relentless focus on the deficit by media and too many politicians on both sides of the aisle has now made that a major concern even among Americans who are hurt by that focus.
Meanwhile, although it is not as desperately needed as a fix for the one in six Americans who is unemployed or underemployed, we need a fresh measurement to replace GDP. Because that gauge does a crummy job. For example, the destruction of natural habitat and of the social structure are counted as pluses if that leads to more production. Pollute a stream while manufacturing some toxic toy, you get a rise in the GDP. Clean up the stream, another rise in the GDP. Pump unreplenishable fossil water out of the Ogallala Aquifer to irrigate Nebraska wheat fields, another rise in GDP. Running the war on some drugs puts people to work, so another rise in GDP. Hire more prison guards while other public-sector employees face furloughs and lay-offs, another rise in GDP. Build a tank, a rise in GDP. Have it blown up in a war, a rise in GDP to build a new one and to cover the medical treatment the tank's injured crew will need.
Of course, GDP is only one gauge economists use to calculate how well or poorly the economy is doing. But none of those other gauges get anywhere near the media attention that GDP does. Without an alternative, that's no surprise.
Although there have been other attempts, a serious, systematic job to come up with a more thorough gauge in addition to GDP was begun in February 2008 by French President Nicolas Sarkozy who put Nobel laureate Joseph Stiglitz in charge of the Commission on the Measurement of Economic Performance and Social Progress. Prompting this effort was the increasing disconnect between what politicians and statisticians tell people about the economy and the distrust arising from how those people perceive it affecting their day-to-day life. As Sarkozy said of this distrust when the commission's 292-page report was published September 14, 2009: "Nothing is more destructive for democracy." People, he said, "think we're lying to them."
Yes, they do. The latest Gallup Poll shows 55 percent of Americans believe the economy is still in a recession or depression.
Source: http://feeds.dailykos.com/~r/dailykos/index/~3/QyILCeLm0u8/-First-quarter-drop-in-gross-domestic-product-weakens-job-prospects
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