Graham Summers
Phoenix Capital Research
August 16, 2010

For months now I have averred that the US economy was not in recovery and that in point of fact all talk of “recovery” was a load of BS.

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I realize this view is far from the consensus. Even those who are in the bear camp aver that the Stimulus did in fact bring us out of recession at least temporarily.

However, I would strongly contend that the recovery was in fact non-existent for the following reasons:

1. The Government data used to validate the recovery (GPD, unemployment, etc) is clearly massaged if not bordering on outright propaganda

2. We are in fact in a depression and the “recovery” was simply a bounce in economic activity taking place within the context of a larger economy contraction

Regarding #1, every Government data point used in promoting the “recovery” had some degree of fudging in it. Let’s consider GDP for instance.

There are numerous devious tactics used to overstate GDP growth, however, the most obvious gimmick the BLS uses is overstating GPD growth in the present and then revising it lower in the subsequent quarters.

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A perfect example of this is the latest GDP numbers which featured large revisions of the first two quarters of the alleged “recovery”: 3Q09’s GDP growth was revised down from 2.2% to 1.6% and 4Q09’s GDP growth was revised down from 5.6% to 5%.

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In my opinion, these revisions occur because the Feds greatly overstate GDP growth via numerous gimmicks and then revise the numbers to be more in-line with reality after the fact.

For an example of how the Feds overstate GDP in the present, consider the recent 2Q10 GDP growth numbers. According to last Friday’s announcement, second quarter GDP growth came in at 2.4%. However, several portions of this growth are questionable to say the least.

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