The U.S. economy shrank at an annual rate of 2.9 percent during the first three months of 2014, government bean counters announced this morning. That matches the worst non-recession contraction of the U.S. economy in over 40 years.
Each quarter, the government releases three sets of numbers gauging the size of the U.S. economy: preliminary, revised, and final. Today’s numbers were the final version. This is important, because the numbers drastically changed throughout the process, as did the liberal spin about the economy. The preliminary numbers, released at the end of April, suggested that the economy barely chugged along during the first quarter, growing at a meager rate of 0.1 percent.
A normal observer would look at that number and be disappointed, given that it was posted nearly 5 years into an alleged economic recovery. The leftist online illiterati, however, is decidedly abnormal. Here’s how they spun the news:
Health care spending is on the rise, and that’s a good thing http://t.co/qld4G99MKT
— ThinkProgress (@thinkprogress) April 30, 2014
— HuffPostBiz (@HuffPostBiz) April 30, 2014
These commentators seized on the fact that health care spending rose enough to offset contraction elsewhere. Forget that Obamacare promised to drastically reduce long-term health care spending: this spike was great news.
Then came the revised numbers, which were released at the end of May:
The U.S. economy was battered even more than first suspected by the harsh winter, actually shrinking from January through March. The result marked the first retreat in three years, but economists are confident the downturn was temporary.
Sadly, Obamacare could no longer pretend to be the economy’s savior. Spinmeisters found their villain, though: winter. As everyone knows, winter is a freak, unpredictable event. And if there’s anything that makes a cold winter even colder, it’s global warming.
Fast forward to this morning, when the final GDP numbers showed that the economy actually shrank by 2.9 percent, the biggest drop since the devastating recession of 2008 and 2009. Bad news, right? Nobody could possibly be happy about an economy that shrank, due in large part to a massive, 11.7 percent drop in private investment. That plunge in investment contributed to more than two-thirds of the entire drop in GDP last quarter (the investment shrinkage was responsible for 1.97 percentage points of the 2.9 percent drop in GDP). Residential investment fell by 4.2 percent. Exports of U.S. goods fell by 11.4 percent (apparently other countries stop buying stuff from us when it’s winter, even if it’s summer for them).
Your friendly White House apologists at at TNR and Vox found some pretty awesome news, though. News so good that it completely offsets one of the worst economic performances in years. That’s right: according to the best and the brightest, the terrible economic report today is actually good news, according to TNR’s Danny Vinik:
But this may be a case of bad news that’s not so bad—and maybe even good. The reason why consumer spending fell is that health care spending decreased by 1.4 percent in the first quarter. In fact, in the BEA’s second estimate, health care spending contributed 1.01 percent to the growth rate. Under the third estimate, it subtracted 0.16 percent.
For those keeping score at home, when health care spending increases and props up GDP, it’s a good thing. When health care spending falls and subtracts from GDP, it’s a good thing. And when the economy significantly shrinks when it’s supposed to be rapidly growing, it’s a good thing. Sure, your car got totaled by an idiot who didn’t know what he was doing. The important thing to remember is that as a result, you’ll be able to save money on gas for the next few weeks. Make sense?
That time when health care spending went down and people got sad about it. #bizarrowonkery
— Sarah Kliff (@sarahkliff) June 25, 2014
That’s a great point, Sarah. It’s like that time Mary Todd Lincoln was treated to a really delightful little rendition of “Our American Cousin” but for some reason wouldn’t shut up about that man who made a mess of things in the balcony. What a drama queen.