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A.P continues carrying water for the dark side, with this headline today:

Economy grows at fastest pace since 1984

Not that it isn't true, as the first paragraph of the story, which was written by Jeannine Aversa, attests:

Oct. 30, 2003 -- WASHINGTON (AP) -- The economy grew at a scorching 7.2 percent annual rate in the third quarter in the strongest pace in nearly two decades. Consumers spent with abandon and businesses ramped up investment, compelling new evidence of an economic resurgence.

Note it says "businesses ramped up investment". You have to go all the way to the bottom of the story, to the very last paragraph, to see this:

But inventory reduction by businesses continued to be a drag on the economy and reduced third-quarter GDP by 0.67 percentage point. And a continuing reluctance by businesses to build up stocks suggest that executives remain wary of the rebound's staying power.

Meaning, of course, that businesses are still over-capacity, which is the real problem in this recession. Until demand increases to exceed capacity, there won't be any meaningful new hiring. You get a taste of that in paragraph 7:

Although the nation's payrolls grew by 57,000 in September -- the first increase in eight months -- the economy needs to add a lot more jobs than that each month to drive down the 6.1 percent unemployment rate, analysts have said.

...then have to wait to paragraph 15 to have the reality spelled out:

Sustained turnarounds in capital spending and in hiring are crucial to the economy's return to full throttle. Economists said business wants profits to improve and wants to be sure of the recovery's vigor before it goes on a spending and hiring spree.

So what, then, is driving the increase? Consumer spending, of course.

In the third quarter, consumers ratcheted up their spending at a brisk 6.6 percent annual rate. That was the biggest increase since the first quarter of 1988 and was up from a 3.8 percent pace in the second quarter.

Consumers in the third quarter spent lavishly on big-ticket items, such as cars, boosting such spending by a whopping 26.9 percent rate. And, they also spent briskly on "nondurables'' such as food and clothes, which grew at a 7.9 percent pace, the strongest showing since the first quarter of 1976.

So what we have is increased consumer spending without an increase in employment. Which suggests even higher increased consumer debt. In other words, consumers are buying on credit, not spending new wealth.

How long can that be sustained if businesses are still playing the waiting game? Can consumers actually throw themselves into debt enough to make demand exceed capacity?

Do they really want to?

Would you?

A few other points of interest in the way this article is written. The first is the immediate credit--in paragraph 5--that's given to Bush:

Near rock-bottom short-term interest rates, along with President Bush's third round of tax cuts, have helped the economy shift into a higher gear during the summer, economists say. The next challenge is making sure the rebound is self-sustaining, they say.

Notice that the credit given the tax cuts is from "economists". In the next paragraph, however, the dissent is qualified as partisan:

Democrats, however, argue that the tax cuts contributed to a record budget deficit in the recently ended 2003 fiscal year and have done little to spur significant job growth.

Thanks, A.P.

Another buried gem, way down in paragraph 17:

Federal government spending, which grew at a 1.4 percent rate, was only a minor contributor to GDP in the third quarter. Spending on national defense was flat. But in the second quarter, military spending on the Iraq war -- which grew at a whopping 45.8 percent rate -- helped to catapult economic growth.

I dunno, I'm at a loss. Does "spending on national defense was flat" mean it stayed at the level from the previous quarter, which represented a 45.8 percent increase? I think that's what this means. If so, it certainly would NOT be considered a "a minor contributor to GDP".

Perhaps Ms. Aversa could look it up, and write a clarification. I won't hold my breath.