The Economy That Could

How is it that the economy continues to exceed expectations by the media and we only learn of how strong the economy is doing after the fact. Such is the case with the latest reports on the fourth quarter of 2006:

The Commerce Department reported this morning that the nation’s gross domestic product, the broadest and best-known measure of economic activity, grew at a 3.5 percent annual rate in the fourth quarter of 2006, noticeably faster than the rates recorded in the second quarter (2.6 percent) or the third (2 percent).

For the full year, the gross domestic product — the nation’s total output of goods and services — grew 3.4 percent, an improvement on 2005, though not quite matching the 3.9 percent rate of 2004.

Today’s report contains other signs that the economy is on a steady footing. A broad measure of inflation that the Federal Reserve watches carefully settled back down to a 2.1 percent annual rate for the quarter.

The economy continued growing despite a spike in oil prices that happened in the middle of 2006 and eased towards the end of the year. Also, the growth in the economy occurred despite the fact that the media repeatedly downplayed good news on the economy throughout 2006 - highlighting that a given piece of data was worse than a month before, ignoring that the prior month was a record (which itself was ignored when the focus was on a completely different piece of information that wasn't as good). If the good news was on GDP, the focus would be on payroll or the housing market if that figure wasn't as bright; shifting the goal posts.