Wampum

Field of Dreams Wishful Thinking

A few weeks back, I took Washington Post journalist Jonathan Weisman to task for writing essentially an Op/Ed piece on Bush's re-election prospects due to the surging economy. Watching a non-editorial writer cheerlead is one thing, but when that cheerleading is based on facts not entirely in evidence, it's hard to keep quiet.

Weisman's support for Bush's stunning economy recovery was based on consumer confidence and housing numbers. However, neither of these factors could, at the time of the article, hold much water, as both were beginning a slow slide southward.

This week, it appeared that more lackluster, even downright bad, economic news hit the presses, but you wouldn't know that from the desk of the Associated Press. Reporting on economic news today, it took a decidedly Pollyanna-esqe approach:

Orders for Durable Goods Drop 1.8 Percent
By THE ASSOCIATED PRESS Filed at 2:27 p.m. ET

WASHINGTON (AP) -- Factories saw orders for big-ticket goods drop by 1.8 percent in January, but much of that reflected huge declines in bookings for commercial and military airplanes.

The overall figure, released by the Commerce Department Thursday, obscured gains in other areas as the nation's manufacturers work to keep their recovery moving along.

The 1.8 percent decrease in orders for ``durable'' goods -- costly manufactured products expected to last at least three years -- came after a revised 1.6 percent gain registered in December, which was better than previously estimated.

Although economists were forecasting a 1.4 percent rise in new bookings in January, the decline actually appeared to overstate the weakness.

``Orders are bouncing around like crazy, but when you cut through the clutter, demand remains pretty good,'' said Joel Naroff, president of Naroff Economic Advisors. ``The general trend is still decent, but there is reason to be cautious as it would be nice to see a more consistent upward trend.''

...

Excluding orders for transportation equipment such as airplanes and cars, which tend to swing widely from month to month, all other durable goods orders increased by a solid 2 percent in January. That was up from a 1.7 percent advance in December -- and the biggest rise since October.

Orders for primary metals, including steel, fabricated metal products, electrical equipment and appliances, and communications equipment, all posted sizable gains in orders in January.

However, orders for commercial and military aircraft plunged by 27.9 percent and 34 percent, respectively, swamping the gains reported for other big-ticket goods.

How much do you want to bet that the AP reporter never even opened the Durable Goods report, conveniently found here at the Census Bureau? Calculator in hand it doesn't take more than a few minutes to figure out much of what is coming out of the Administration's spokesperson is spin, spin, spin. Yes, transportation (trains, planes and automobiles) took a big hit, dragging down the rest of the report. But these industries make up almost a quarter (23%) of durable goods orders. If things are bad in Seattle and Detriot, it means lots of workers are hurting. However, the author's assertion that the drop in aircraft orders essentially zeroed out gains in all other areas is plain bunk: The actual decline in civilian aircraft orders amounted to a mere 1.7 billion drop, while military plane orders decreased 1.3 billion. This is out of a 181 billion dollar report. However, if one is to take that tack, why no assertion that the 73% increase in communication equipment orders, amounting to an increase of 3 billion, balances out the 3 billion in aircraft losses?

The truth is that there are outliers on both extremes, and the remaining middle ground of the report is downright lackluster, particularly when viewed in the three month trend line it provides. Metals are in fact up, as AP reports, but machinery and computers, goods one expects to see rise in an economic upturn, were in fact down considerably. And non-specified goods, which account for more than 30 billion in orders, continued their three-month slide into negative territory.

But let's be honest: January's durable goods report was nothing to cheer about.

The Associated Press continued the full-court positive press by downplaying this week's existing and new home sale numbers, the latter now down for the fifth straight month. Of course, the article completely ignored this (and last) week's devastating consumer confidence numbers, which took their largest dive since the 1980s.

In the Great War, the French general staff adopted the offensive spirit approach to fortified German machine guns - Through sheer will alone could they defeat superior weapondry of the Hun. This Administration, and apparently some in the media, have taken the same approach with the purportedly healthy economic recovery.

If you will it, it will come.

[Update: typo correction]

Posted by MB Williams at February 26, 2004 06:38 PM | TrackBack