We Just Went Through the Worst Month Since the Great Recession

We Just Went Through the Worst Month Since the Great Recession

The Fiscal Times/iStockphoto
By Yuval Rosenberg

We already knew the economy really struggled over the first few months of 2015, with March being especially rough. A new report from economists at Macroeconomic Advisers shows just how bad a month it really was.

The forecasting firm, which tracks economic progress on a monthly basis rather than just a quarterly one, now says that GDP fell 1 percent in March. “This was the largest decline since December 2008, when the U.S. economy was in the throes of recession,” its update notes.

The Commerce Department initially estimated that GDP grew at a seasonally adjusted annual rate of 0.2 percent in the first quarter. An updated report, due May 29, is now expected to show that the economy actually shrank over the first three months of the year. J.P. Morgan economists have lowered their tracking estimate of first-quarter GDP from -0.8 percent to -1.1 percent based on data released over the last two days.

Related: Why So Many Americans Are Trapped in ‘Deep Poverty’

As we’ve written before, though, the downturn isn’t necessarily reason to worry about the fundamental health of the economy, or at least it shouldn’t stoke fears that we’re diving into another recession. As the Macroeconomic Advisers report explains, “A sharp decline in net exports more than accounted for the decline in monthly GDP, as resolution to the West Coast port dispute led to a surge in imports to well above the recent trend. As a result, they write, they believe the one-month plunge “overstates the underlying weakness in the economy.”

That’s not to say the economy is particularly strong, either. Both Macroeconomic Advisers and J.P. Morgan now forecast second-quarter GDP growth to come in at a tepid 2 percent annualized rate.

Why Craft Brewers Are Crying in Their Beer

		<p>The $85 billion in spending cuts is just $10 million more than what Americans spent on beer in 2011.</p>
Scott Olson/Getty Images
By Michael Rainey

It may be small beer compared to the problems faced by unemployed federal workers and the growing cost for the overall economy, but the ongoing government shutdown is putting a serious crimp in the craft brewing industry. Small-batch brewers tend to produce new products on a regular basis, The Wall Street Journal’s Ruth Simon says, but each new formulation and product label needs to be approved by the Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau, which is currently closed. So it looks like you’ll have to wait a while to try the new version of Hemperor HPA from Colorado’s New Belgium Brewing, a hoppy brew that will include hemp seeds once the shutdown is over.

Number of the Day: $30 Billion

Benis Arapovic/GraphicStock
By The Fiscal Times Staff

The amount spent on medical marketing reached $30 billion in 2016, up from $18 billion in 1997, according to a new analysis published in the Journal of the American Medical Association and highlighted by the Associated Press. The number of advertisements for prescription drugs appearing on television, newspapers, websites and elsewhere totaled 5 million in one year, accounting for $6 billion in marketing spending. Direct-to-consumer marketing grew the fastest, rising from $2 billion, or 12 percent of total marketing, to nearly $10 billion, or a third of spending. “Marketing drives more treatments, more testing” that patients don’t always need, Dr. Steven Woloshin, a Dartmouth College health policy expert and co-author of the study, told the AP.

70% of Registered Voters Want a Compromise to End the Shutdown

National Zoo closed in due to the partial government shutdown in Washington
KEVIN LAMARQUE
By The Fiscal Times Staff

An overwhelming majority of registered voters say they want the president and Congress to “compromise to avoid prolonging the government shutdown” in a new The Hill-HarrisX poll. Seven in ten respondents said they preferred the parties reach some sort of deal to end the standoff, while 30 percent said it was more important to stick to principles, even if it means keeping parts of the government shutdown. Voters who “strongly approve” of Trump (a slim 21 percent of respondents) favored him sticking to his principles over the wall by a narrow 54 percent-46 percent margin. Voters who “somewhat approve” of the president favored a compromise solution by a 70-30 margin. Among Republicans overall, 61 percent said they wanted a compromise.

The survey of 1,000 registered voters was conducted January 5 and 6 and has a margin of error of 3.1 percentage points.

Share Buybacks Soar to Record $1 Trillion

istockphoto
By The Fiscal Times Staff

Although there may be plenty of things in the GOP tax bill to complain about, critics can’t say it didn’t work – at least as far as stock buybacks go. TrimTabs Investment Research said Monday that U.S. companies have now announced $1 trillion in share buybacks in 2018, surpassing the record of $781 billion set in 2015. "It's no coincidence," said TrimTabs' David Santschi. "A lot of the buybacks are because of the tax law. Companies have more cash to pump up the stock price."

Chart of the Day: Deficits Rising

By The Fiscal Times Staff

Budget deficits normally rise during recessions and fall when the economy is growing, but that’s not the case today. Deficits are rising sharply despite robust economic growth, increasing from $666 billion in 2017 to an estimated $970 billion in 2019, with $1 trillion annual deficits expected for years after that.

As the deficit hawks at the Committee for a Responsible Federal Budget point out in a blog post Thursday, “the deficit has never been this high when the economy was this strong … And never in modern U.S. history have deficits been so high outside of a war or recession (or their aftermath).” The chart above shows just how unusual the current deficit path is when measured as a percentage of GDP.