Ruh Roh: First Quarter GDP Growth Wasn't Even the Anemic Reported Number of 2.2% - It Was Actually... Zero

Just as it understates unemployment by "disappearing" millions from the labor force, it would appear that the Obama administration has transformed the GDP number into propaganda.

The Advance Estimate for Q1 GDP came in at 2.2%, down from 3.0% in the previous quarter, and below most mainstream media estimates of 2.5%.

The GDP deflator is reported to have averaged 1.2% annualized in the past 2 qtrs. Had the trend rate from '11 persisted, the deflator would have subtracted 2.6% annualized from real GDP, resulting in a 2-qtr. growth of real GDP of 0%.

...Rick Davis at the Consumer Metric Institute makes a similar calculation.

...Once again the BEA has used "deflaters" that will strain the credibility of the public, especially if they buy gasoline. To correct the "nominal" data into "real" numbers the BEA assumed that the annualized inflation rate during 1Q-2012 was 1.54%. As a reminder, lower "deflaters" cause the reported "real" growth rates to increase -- and once again very low seasonally adjusted BEA inflation "deflaters" have been the headline number's best friend. If the raw "nominal" numbers were instead "deflated" by using the seasonally corrected CPI-U calculated by the Bureau of Labor Statistics (BLS) for the same time period, nearly the entire headline growth rate vanishes -- and the resulting growth rate would have been a minuscule 0.08% with "real final sales" contracting.

And real per capita disposable income actually shrank during the quarter shrank at an annualized -0.27% rate (from $32,699 per capita to $32,677 per capita) -- and it remains lower than it was 5 quarters ago. -- even using the BEA's optimistic "deflaters." Real-world households likely felt the pinch even more.

...Doug Short at Advisor Perspectives has some interesting charts in his post GDP Q1 Advance Estimate Disappoints at 2.2%... [The accompanying] chart shows the disturbing trends...

Three years into a recovery, growth (if you believe preposterous deflators) is a mere 2.2% but only 0% if you don't. Moreover, with parts of Europe in an outright depression, with even Germany and the UK in recession, and with China slowing significantly, the odds the US economy decouples for too much longer is now approaching zero.

Given the proclivity of the Obama administration to dispense propaganda, rest assured that the numbers it announces will be utterly disconnected from reality. And Pravda media will lap it up and regurgitate what ever they're told.

One good thing about the Obama economy? It will hasten the demise of the Statist media.