American Citizens News Network

April 30, 2008

The Facts

When the Gross Domestic Product (GDP) report for the first quarter came out at 8:30 AM ET this morning, it was up 0.6%. The Employment Cost Index (ECI) was up 0.7%. CNBC’s Rick Santelli reported those numbers from the floor of the stock exchange. The stock market started a sharp upward trend on this news. The Dow nearly tripled in just a matter of minutes. This was obviously good news to investors. CNBC’s Steve Liesman of Squawk Box had Diane Swonk of Mesirow Financial and Brian Wesbury of First Trust Advisors on as guest to discuss the just released numbers and how that relates to the economy. Mike Jackson, CEO of AutoNation and guest CEO of the week was also in on the discussion.

A furious debate ensued between Brian Wesbury/Rick Santelli and Steve Liesman/Mike Jackson. Wesbury and Santelli insisted no recession was here or in sight, while Liesman and Jackson insisted we were in a recession in spite of what the just released numbers said. Diane Swonk didn’t really say we were in a recession, but she disagreed with Wesbury and Santelli on their view. She said she wasn’t nearly as optimistic as them. Mike Jackson finally jumped into the fray and said the recession was here. He said this was not even a close call, then he quoted things like the housing depression and a durable goods recession combined with a credit crisis. Jackson said this was a “nitroglycerin” situation, and tried to finish what he had to say, but Rick Santelli cut him off sharply.

My View

If you don’t like or agree with someone on what they are saying, stop them from talking. And that’s just what Rick Santelli did to Mike Jackson. Of course, this is what we’ve all come to expect from loud mouth Santelli. He has a famous reputation for verbally stomping on people who disagree with him.

I will not pretend to be an economics expert, but it doesn’t take one to know that if we are not officially in a recession, then it’s just a matter of opinion. There were a lot of negatives that came out with the GDP. There were only two positive things that gave the GDP a plus; exports and trade was up. Take those two things out, and we have a negative GDP. So depending on whether or not you want us to be in a recession, just use the data that supports your agenda.

As for as the ECI number, remember this; Employment Cost Index can only be down if the employer has lowered their cost for employees. With all the layoffs, cutbacks, benefits reduction, cheaper manufacturing due to outsourcing, etc., it’s no wonder the ECI is up. But when this number goes up, there is a down on the other side. And guess who the “down” is affecting? The middle and lower class working man and woman. So what’s the result of a higher GDP and lower ECI? A lot of stock traders and stock trading companies get richer. And we all know that for the past 17 years or so, that’s the only thing that matters. So when you hear a stock trader say we are not in a recession, just remember that acknowledging we are in a recession has a drastic negative affect on their business.