Economics

Expectations Management = Set Low Standards, Then Fail to Meet Them

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How far down the crapper has the recent "recession is over" expulsion been flushed? Mish's Global Economic Analysis takes a hard look at some recent numbers from the Institute for Supply Management – a good indicator of what consumers are actually buying—and it turns out nobody's buying much of anything except $4,500 used cars:

[Eight] out of 10 Non-Manufacturing components are worse this month than last month. Only deliveries are in the green while inventories are contracting at a slower rate.

By contrast, 7 out of 10 Manufacturing components are in the green and the other three are contracting at a slower pace…

Regardless, the NBER is unlikely to declare the end of the recession on numbers like these. Put away your party hats and horns for at least another month…

The Global GDP Rebound Is Underway, But Who's The Buyer? The answer of course is government, not the consumer, except for inventory rebuilding and "free money" programs like "cash for clunkers".

Meanwhile, in another you-call-it-corn moment, the same Labor Department statistics that Americans for Tax Reform describes as showing 2.2 million lost jobs since the start of the stimulus package are being defined by the White House as proof that 485,000 job have been saved or created or both. Meanwhile, pro-stimulationists are stretching the truism that unemployment is a lagging recovery indicator into something like an argument that continuing job losses prove the recovery is underway. And it helps if you can fix the numbers so that an increase in the number of job losses looks like lower unemployment. As one commenter notes here, it's a near certainty that today's unemployment numbers will get an "unexpected" upward revision in the next few weeks.

With his usual laser-like focus on the problem at hand, Treasury Secretary Tim Geithner is reacting to continued destimulation by cursing at subordinates who aren't moving fast enough to create a super-regulatory supergroup. Tough guy! Maybe Geithner's been watching the Patton DVD in that house he can't sell for more than he paid in 2004. (At this point he probably has to make do with The Last Days of Patton on VHS.)

Finally, longtime economic doomsayer Nouriel Roubini is predicting the onset of double-dip recession. (I'm agnostic on the double-dip because the first dip isn't even over yet. I'm holding out for the Klink Dipsy-Doodle – the most brilliant maneuver in the history of war, but one that gets surprisingly little attention.)

All of which means the war of definitions isn't just between the the White House and the Republicans but within the White House itself. President Obama, so sobersided he brings Joe Biden along for a beer, continues to plumb the depths of his sobersidedness by downplaying recovery talk. Last week Newsweek set up the perfect alley-oop with its goofball "Recession Is Over" cover, and here's how the president responded:

I bet you found that a little startling. I know I did. [Polite laughter] Now, it's true that we've stopped the free-fall. The market is up and the financial system is no longer on the verge of collapse. We're losing jobs at nearly half the rate we were when I took office six months ago.

The "free fall" imagery works even if it does raise the inevitable question: "Whadday mean 'we,' Kemo Sabe?" But today lovable lug Joe Robert Gibbs completely screws up the metaphor by bringing in an image out of Brian's Song:

The patient has stabilized. Will the patient see good days and bad days? Will the fever come back and maybe spike again? Absolutely. We're assuming that that's going to happen.

So which is it? Patient? Skydiver? Out of control aircraft? I propose a combination:

The critically ill patient has been shot from the top of Earth's gravity well; the fiery friction of atmospheric re-entry has canceled a small part of the incoming velocity, though it remains unclear whether the rate of descent can be reduced to a comfortable 32 feet per second before explosive impact with the surface of the Earth causes another Tunguska event.

You can use that, Mr. President. No need to credit me!