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GDP Shrinks. WSJ Says ‘No Reason to Panic.’

Ryan W. McMaken
Lew Rockwell Blog [1]
Jan 30, 2013

If you have to tell [2] people not to panic, you’ve already lost half the battle.

According to the feds, the US GDP shrank 0.1% (annualized) in Q4. These are preliminary figures, of course, and recent revisions have been mostly down.

This also comes on the heels of recent news from the UK where the economy shrank, and where, according to [3] The Telegraph, the economy is headed for a “triple dip.”

Most alarmingly, all of this contraction comes as central banks continue to print money like there’s no tomorrow, underlying the true weakness in the economy.

The soothsayers will tell us that the real problem is that government spending has been “declining.” That’s not really true, of course. By “decline” they mean rates of increase in spending have somewhat slowed. Nevertheless, since GDP includes government spending, there’s not really any problem in the economy beyond declining government spending, they’ll say.

Well, if the private sector were doing anything other than treading water, there would have been real growth following four years of hard-core monetary easing. But that isn’t happening.

Update: Now says The WSJ [4]: ‘Unusual Quarter of Contraction Doesn’t Mean Recession.’ Yes, that’s true. It just means the economy isn’t adding jobs anywhere near a level high enough to actually reduce unemployment. No biggie. Move along. Nothing to see here.