Day By Day

Thursday, October 30, 2008

The Stopped Clock Strikes (Maybe)

The drumbeat has gone on and on and on. Democrats have long been claiming that the US in in recession, but it hasn't been true..., until now [maybe]. The Commerce Department reports that US GDP actually declined in the past quarter. The decline was 0.3 percent, much less than "experts" had predicted [do they ever get these things right?]. Now, technically, that is not in itself enough to certify that we are in recession [that takes two consecutive quarters] but in this election season you can count on the lefties out there to crow and claim that the figures are confirmation of their dire predictions.

Read it here.

But it is by no means clear that the economic situation is nearly as bad as the politicians claim. The Federal Reserve reports:

Total loans and leases from U.S. banks are growing at a 19 percent annual rate over the last three months. Business loans are up 19 percent. Consumer loans are up 13 percent. Real estate loans, which include home-equity and commercial real estate loans, are up 15 percent at an annual rate.

The worst story is inter-bank loans. They are flat. That’s the LIBOR story, which is healing after the FDIC guaranteed bank-to-bank loans. The LIBOR rate has come way down. I think the FDIC move was the single-most important contributor to credit stability.

But when you look at all the other loan categories that are rising, and then the 20 percent growth of the basic money supply, and the tax-cut effect of plummeting energy costs, you have to wonder: Just how bad is our economic story?
Read it here.

Of course, by the time any improvement becomes undeniable [and it will] the Democrats will be in a position to take credit for the rebound, and of course they will.