By Steve Eggleston

On Wednesday, the Bureau of Economic Analysis released its third and final regular estimate of Gross Domestic Product, and the news was very bad. Real, or inflation-adjusted, GDP contracted by 2.9% on an annualized, seasonally-adjusted basis, 1.9 percentage points worse than the 2nd estimate of 1.0%. That drop is the largest between the 2nd and 3rd estimates since at least 1976, and the 2.9% inflation-adjusted contraction is the 17th-worst performance since quarterly estimates began in 1947.

The news is even worse on the nominal, or non-inflation-adjusted, front. Nominal GDP contracted by 1.7% on an annualized, seasonally-adjusted basis, the first contraction since the Great Recession, the 10th-worst quarterly performance on record, and other than the heart of the Great Recession (4th quarter of 2008 and 1st quarter of 2009), the worst performance since the 4th quarter of 1960.

The biggest driver of the downward revision was the incorporation of actual numbers for health care spending. While the 1st estimate had spending on health care increasing by 9.9% and the 2nd estimate had it increasing by 9.1%, the actual spending on health care decreased by 1.4%. In terms of what that meant to the change in real GDP, the 1st estimate had health care spending contributing +1.17 percentage points to the +0.1% GDP growth, the 2nd estimate had it contributing +1.01 percentage points to the -1.0% GDP contraction, and the actual numbers had it contributing -0.17 percentage points to the -2.9% GDP contraction.

ZeroHedge pointed out that 2nd-to-3rd estimate revision of health care spending is highly unusual, and something not seen in the prior 4 quarters. The reason it happened – instead of using wage and employment data in the first 2 estimates of GDP, the BEA used PlaceboCare enrollment data and Medicaid spending.

A side note before I continue – the reason my co-blogger Shoebox and I call it PlaceboCare instead of ObamaCare is because its effects on health care and the economy are like giving a diabetic a heap of sugar pills and telling that diabetic it’s “medicine”. Between that and the abandonment of any notion of repeal by Republicans, I figure it fits better.

Even though the BEA said that they won’t “regularly” include PlaceboCare data into GDP estimates, there’s a few questions that really need to be asked of the BEA, especially since the White House spin at the end of April was that, but for PlaceboCare, the economy would have contracted, followed by the end-of-May spin that, but for PlaceboCare, the economy would have cratered even worse:

  • Who ordered that radical change in the first place?
  • Was that change done only after it was determined that using the normal method of estimation would result in a contraction and using PlaceboCare/Medicaid data would not result in a contraction?
  • Under what conditions will PlaceboCare/Medicaid data be used again?

The wild discrepancy between PlaceboCare-driven estimates of health care spending and actual health care spending is yet another datum point in the universe of data that the claims PlaceboCare is a positive, 8 million people enrolled in it, and 4 million previously-uninsured now have health insurance, are nothing more than a bunch of fetid macaca.

As for what the crater means going forward, it depends on who one asks. Goldman Sachs took the opportunity to up its 2nd-quarter estimated GDP growth from +3.8% to +4.0% specifically because of the bad-news 1st-quarter report and the worse-than-expected headlines on the May durable goods report released at the same time. Meanwhile, Tom Blumer noted two different AP stories where some economists knocked down their expectations to as low as +2.5%. Of note, assuming there is no further revision of 1st-quarter of 2014/4th-quarter of 2013 GDP*, it would take a tick over +3.0% real GDP growth (3.01%, actually) in the 2nd quarter just to get to where real GDP was at the end of 2013.

So, who will be right? History isn’t kind to the optimists – every quarter that saw a -1.5% GDP contraction or greater since 1947 came either during or immediately prior to a recession. That May durable goods report, despite Goldman’s protestations, is also not a good sign – whether one looks at overall durable goods orders or the non-durable-goods orders Goldman and much of the Presstorian Guard – Business Division pinned their hopes on, May durable goods orders were behind March’s. Worse, personal expenditures, the single largest component of GDP, declined in inflation-adjusted terms in both April and May.

* The BEA will get another crack at the GDP numbers from the 1st quarter, as well as from (at least) 2011 through 2013, next month when it releases its annual revision of GDP along with the advance estimate of 2nd-quarter GDP. I have no doubt that there will be a positive number describing real GDP growth for the 2nd quarter. What I do doubt is that real 2nd-quarter GDP will be greater than $15,824.2 billion (in 2009 chained dollars), which is what it was as of Wednesday.

by baldilocks

The weekend posts at Ace of Spades HQ are, for the most part, interest-specific. The guns, food, gardening threads, and my favorite, the Sunday Book Thread, are posted by Ace’s co-bloggers, giving the proprietor the weekend off. Usually.baldilocks

Today, however, there’s a people story posted by one of the co-bloggers, WeirdDave; it’s a recount of a possible attempted grift/robbery. Or, perhaps it was merely a cavalcade of incompetence from an observer’s viewpoint; Dave isn’t sure. Go read it; then come back.

In the comments, many are lamenting the decline of competence–that old can-do spirit–among Americans born later than the Baby Boomer Generation and I agree. I’m a late-born Boomer–1961–but I can’t point the finger too much, however, without pointing at myself. I’m a city girl and a bit of a BAP. However, there are many things that I learned to do in my middle age or had to do because of perceived lack of resources.

A small example: I sell items on the usual websites know for selling and when I went shopping for packing materials, I was appalled at the prices. So, I went online looking for DIY packing materials. When I found them, my response was, “of course.”  I made virtually free packing materials using things I would normally put in the recycle bin: balled-up circulars–which perennially clog my mailbox–and shredded paper stuffed and stapled into brown paper lunch bags. (The bags did cost $2 for two hundred.) I was proud of myself for finding the information, but, in hindsight, it seemed so obvious. And, therein lies another revelation.

You can do what you have to do when you are determined to do what you want to do. And, more often than not, your solution(s) will be right in front of you if you are looking for them. It’s a feature of God’s grace.

And I think that’s the issue which Dave and the commenters are observing: lack of desire to learn new skills , lack of desire to acquire new abilities, lack of desire to improvise, to adapt, and to overcome. It’s a dearth of vision and of faith.

We have become so used to convenience that, when faced with inconvenience and/or adversity, many of us panic or become angry–as if our rights have been violated. We have forgotten that this is a world of Murphy’s Law–if we ever actually learned it in the first place—and, therefore, we fail to make contingency plans for feces to happen. And when feces does happen, we give up—or throw a fit, which amounts to the same thing.

Determination is the missing element in much of 2014’s American population, and I predict that determination’s presence will be the key element of survival in the tougher times to come.

The good thing about determination, though, is this: it’s free…like God’s grace.

Juliette Akinyi Ochieng blogs at baldilocks. Her first novel, Tale of the Tigers: Love is Not a Game, was published in 2009; the second edition in 2012. Her new novel, Arlen’s Harem, is due in 2014. Help her fund it and help keep her blog alive!

Hi All

I used to have a feature called the Saturday Diner and it’s back in a big way on this week’s show as we broadcast live from Rita Marie’s Dinner Diner in New Bedford MA 623 Brock Ave New Bedford Ma, 774-202-7545. The pancake eating contest starts a 11 AM and our broadcast begins at Noon.

In addition to visiting and meeting with people we’ll be talking with Mike Rogers at 12:30 of Granite Grok about how the Supreme Court ruling will effect elections in the Granite State.

At 1:15 comes Da Magnificent Panel with Joe Mangiacotti Mike Hummell & Mike Wade talking the Mississippi Race, the supreme court rulings and Hat in Hand Hillary.

It all happens Noon today on DaTechGuy on DaRadio. You can join the conversation by dialing in at 888-9-fedora (unless you are listening to the 11 PM replace or the 405 media replay during the week.

As always you have multiple options to hear the show via our online streams click the links to listen.

on FTR Radio online or on our terrestrial stations in the Money Matters Radio Network

WBNW Concord Ma 1120 AM FLAGSHIP

WPLM 1390 AM Plymouth MA

WESO 970 AM Southbridge MA

(and on the Terrestrial stations the replay is 11 PM EST tonight)

And if you miss all of these you can now catch our show on replayed on the 405 media out of California every Tuesday Noon EST (9 AM Pacific)

See you at Noon

The origin of Philosophy began on January 1, 465 B.C.

This is not true, but it reflects a truism that goes back more than 2 millennium.

The word philosophy is a combination of two words which are rich in meaning. The word “Philos” means beloved and loving and the word “Sophia” means wisdom. Therefore, a person who pursues an interest in philosophical subject matter is literally a “lover of wisdom, or a lover of the truth.”

The ancient Greeks are known in antiquity as the founders of philosophy as an academic discipline.

The Greeks of the ancient world gave rise to rational inquiry or what became known as “the examined life” (Socrates); the Greek thinkers of yesteryear asked themselves  questions such as: (1.) Who am I am? (2.) Where did I come from? (3.) Where am I going? (4.) Why is there life as opposed to no life? (5.) How can I get there?

Across the last 2 millennium, the discipline of philosophy has been manifested by three dominant schools of thought.

There is the classical school which is known as the “foundational discipline of inquiry” (Socrates, Plato and Aristotle). Secondly, there is the branch of philosophy known as “Analytic inquiry,” (Bertrand Russell) and finally, of somewhat recent vintage – in the middle of the 20th Century – there arose what was known as the “Existentialist school” (Albert Camus and Jean Paul-Sartre).

One might ask why knowledge of philosophy is so vitally important.

Glad that you asked… Smile!

The reason is somewhat self-evident. Our ability to exist as a nation or civilization depends upon our ability to nourish both our “minds” and our “spirits”; we must remain thinking people.

The discipline of philosophy or rational inquiry enables one to step back from his or her immediate surroundings and practice what psychologists call “self-awareness.”

Mankind unlike the animal kingdom has the ability to create separation or distance from his or her environment and evaluate his or her actions by “asking why” he or she does what she or he is doing.

We are not slaves to our appetites.

In the past, leisure time was a great asset to our cultural well-being because it afforded people a space to pause, reflect, and read classical literature that probed the nature of man in the nature of the human condition.

Do we still as a people believe in the efficacy of the great classical books?  Do we still make time to read and re-read them?

Or, are we so absorbed with social media and entertainment that we are not refreshing our minds as well as our bodies?

Today, both Socrates – and on a Spiritual plane Moses and Jesus Christ – would be profoundly disappointed that we produce scores of successful businessmen, businesswoman and scientists, yet very few people know how to truly think and apply what they learn?

The genius of Western Civilization is that it recognized over the past 2 millennium that 5 historical cities were responsible for its birth, nurture, growth, development, and cultivation.

The contributions from each one of those cities enabled people to grow and live an examined life

The ancient city of Jerusalem (1440 B.C. and 4 B.C.) gave birth to what we call our Judeo-Christian heritage.

Athens, Greece gave birth to philosophy.

Rome, Italy of the first century gave rise to Republican forms of government;

London, England of the Middle Ages was the genesis of modern democracy (Magna Carta 1215 A.D.).

And Philadelphia, Pennsylvania (1776) gave birth to a unique experiment in “ordered liberty” (The Declaration of Independence).

Each one of those cities sparked interest and creativity in the hearts and minds of people. Each one of these cities made an invaluable contribution to the Spiritual, Mental, and Physical development of the world as we know it today.

Ancient Jerusalem is responsible for both the Hebrew Scriptures (Genesis through Malachi) and the development of the Christian New Testament (Matthew through Revelation).

Our ancestors of the past spent countless hours reading the Bible and imbibing its truths.’

(Even deists such as Benjamin Franklin and Thomas Jefferson believed that an accurate reading of the truths of The Holy Bible along with classical study was indispensable for the maintenance of a healthy culture).

In the next few weeks, this journalist wishes to share a list of books to read and meditate upon from the “ancient canon” of literature from those 5 cities that can assist us with recapturing our wonderful heritage that we call Western Civilization.

Classical literature can assist with infusing our souls with mental resiliency and setting our hearts ablaze with a positive moral imagination (C.S. Lewis ?).

The problems that we face today in what some have dubbed “the Cultural War” are not so much a matter of political party identification, but a failure on our part to remember the roots of our heritage and to fight to preserve the things in life that sustain our culture and matter the most.

Bon Appetit!