http://www.weeklystandard.com/blogs/dems...see_698863.html

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In response to the news today that the economy contracted -.1 percent in the final quarter of last year, Democrats are touting the claim that this is "the best-looking contraction in U.S. GDP you'll ever see." The claim was originally made by chief U.S. economist for Capital Economics Paul Ashworth.

"The drag from defense spending and inventories is a one-off. The rest of the report is all encouraging," Ashworth also claimed.

The claim was quickly seized upon by Democrats, looking to share good news about a contracting economy.

Democratic party communications director Brad Woodhouse quickly began spreading the word on Twitter:

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Good luck selling this bucket of turds as perfume you dopey Rat bastards. I am waiting for them to to start in with the "Zero inherited this economy".

Most Americans are distrustful of our leaders in today's world. A shaky economy and a president that thinks he's king doesn't help comsumer confidence. It's going to get worse, not better.

The rest of the report is all encouraging," Ashworth also claimed.

This cat Ashworth needs to pull his head out of his backside! KD provides some insight into the "rest of the report!"

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Yes, the government was real. But the real inventory numbers are more meaningful.

"Buying" growth with federal spending doesn't work. Rick Santelli is hammering on this and he's right -- this is a crap report and is underlining exactly what has been going on for the last several years.

There were other big distortions in the data that were helpful to the number -- for example, "equipment and software" which was up big, but almost all of that is likely attributable to the fear of expiring tax credits for accelerated depreciation (which means "look out below!" for first quarter's report in another three months!

Exports are down big (5.7%) and that is likely not related to tax policy.

Government spending's decrease was all defense; ex-defense it was up 1.4%.

Finally, real gross domestic purchases were only up 0.1% .vs. 2.6% in the third quarter. That's real final demand -- and it collapsed. Note that this was into the holiday season and thus would be expected to be seasonally strong.

Disposible personal income was up big -- and that will require some investigation. A large part of this may be pulled-forward asset sales to get under the tax increase window. The "savings rate" increase implies this was at least partly the case, and may be entirely the case.

Current-dollar GDP (adjusted for inflation) was up only 0.5%, which sucks.

This is a crap report but has hair all over it. While there will undoubtedly be plenty of people pointing fingers when you get the one-time distortions from the fiscal cliff fears out of the report the real issue is found in inventory and domestic purchases -- and both of those suck.

Update: As expected, the detail tables tell the tale -- the personal income addition was from asset sales and special dividends, presumably to get in front of tax rate changes. Specifically, wage income increased by $62 billion, but income receipt on assets was up $141.6 billion on the quarter, a monstrous change. Last quarter this figure was slightly negative and historically it tends to be reasonably stable.

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