Economic growth estimates for the first quarter are down - "And the year started out so very hopeful"

Noting the "great expectations" for faster economic growth this year, Catherine Rampell at the New York Times' "Economix" has this disturbing report:

When 2011 began, Macroeconomic Advisers, a forecasting company, expected that America’s economic output would shape up to rise at a 4.1 percent annual rate in the first quarter, the highest pace in over a year.

But economic reports coming in over the last few months have been increasingly disappointing.

Today, after an especially weak report on February’s trade deficit, the group’s economists lowered their first quarter G.D.P. estimate to a sorry 1.5 percent annualized. If borne out, that rate would be slower than each of the last two quarters, at a time when the economy desperately needs to be rocketing forward so that companies will hasten their hiring.

The Commerce Department will release its preliminary number for first quarter G.D.P. on April 28.

Update: MarketWatch (via CalculatedRisk) reports that forecasters at Morgan Stanley and RBS Securities have also lowered their G.D.P. estimates for the first quarter.

This bad news comes as little other than the scale of proposed spending cuts is being debated as our "serious" path to getting the economy back on track - as a "path to prosperity" even.  One of the NYT's online commenters, Chris Guan, in responding to this "Economix" news, offered strong evidence that allowing our economic agenda to shift radically toward austerity or focusing on the scale of cuts rather than growth, jobs and effective stimulus  - with Democrats appearing to tail after Republicans who are framing the debate - is precisely the wrong direction to move if we're serious about recovery.

Aggressive austerity and spending cuts have been imposed by David Cameron's government in the UK and appear to be dragging the country even further down into recession. According to an article in Bloomberg that Guan links,  "UK retail sales plunged most on record in March."

In the real world the Conservative government's austerity program is making matters worse not better, as one might expect if you're not reliant on "faith-based" economic notions that somehow consumer confidence and greater demand will arise magically in the midst of a program of cutbacks by the government overlaying depressed demand by households:

U.K. retail sales dropped by a record in March as accelerating inflation squeezed households’ finances and concerns about employment prompted consumers to cut back, the British Retail Consortium said.

Sales at stores measured by value fell 1.9 percent from a year earlier, partly due to the timing of Easter in 2010, the London-based BRC said in a report today. That’s the biggest drop since the series began in 1995 and compares with a 1.1 percent gain in February. On a like-for-like basis, which excludes new store openings, sales fell 3.5 percent, the most since 2005.

U.K. households are seeing their spending power eroded at the fastest rate in more than 60 years as food and energy costs soar and the aftermath of the recession restrains wage increases. Signs of a faltering economic recovery as well as the government’s value-added tax increase and the deepest spending cuts since World War II are undermining consumer confidence.

“Uncomfortably high inflation and low wage growth have produced the first year-on-year fall in disposable incomes for 30 years,” BRC Director General Stephen Robertson said in the report. The combination has “left people unwilling to spend unless they really had to.”

Note that UK's inflation is centered in food and energy costs - very critical inflation indicators to consumers, but based on price increases rooted in external factors of the world market and not driven by government monetary or fiscal policy. This inflation in agricultural commodities and oil prices would hit consumers regardless of the British government's economic agenda. Meanwhile, the UK austerity program is clearly not promoting growth or an increase in hiring. In fact it appears to be doing little other than adding to the depression of demand which lies at the heart of their economy's lag in recovery - and of course, the cutbacks are diminishing essential services to an already economically-squeezed citizenry.

There's a signal in these numbers for Congress and the White House.  This issue is not ideological but purely pragmatic - except, of course, to the ideologues of the GOP who are applying demagogy to a problem of government deficits that they, themselves, have created with over three decades of fiscally profligate tax cuts targeted toward the economic elite.

We'll know more about where our own debate over a credible and effective economic agenda - a path back to prosperity - is centered after the President's speech on the economy and his proposed path forward today.  I'm hoping that his program is positive and realistic, rather than "austerity-lite" and reduced to a defensive reaction to the GOP's over-blown Ryan proposal - an agendal that is, based on both the evidence from abroad and any honest analysis, a recipe for disaster - and a cruel one at that.