GDP Is Down 1% — Not 3.8%
Cato's Alan Reynolds explains why here.
Interestingly, the OECD (and most European countries I think) does NOT annualize quarterly GDP growth rates, and reports only the quarterly, non-annualized rate. For example, the OECD reports here that US real GDP growth in QII 2008 at .70%, and not 2.8% (the way it gets reported here, annualized).
8 Comments:
Okay. As long as it makes you feel better.
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Why study economics?
ORLY?
http://clusterstock.alleyinsider.com/2009/1/actually-gdp-dropped--5-ex-inventories
Actually, GDP Dropped -5% (Ex Inventories)
Henry Blodget | Jan 30, 09 11:37 AM
The headline GDP number, -3.8%, briefly seemed a breath of fresh air. Alas, the part of the number that matters, final sales, was lousy. The country made up the difference by stuffing unwanted goods onto store shelves (WSJ):
Consumer spending fell 3.5% in real terms at an annual rate, nonresidential investment plunged 19.1%, and residential investment cratered at a 23.6% rate. This resulted in a weaker-than-expected 4.9% drop in real final sales — there was no demand from the private sector in the fourth quarter. However, an unexpected add from inventories and a neutral trade contribution resulted in real GDP contracting ‘only’ 3.8% (although nonfarm business output fell 5.5%). –RDQ Economics
Surely consumers will be able to borrow enough from the Obama stimulus to buy up all those extra goods in Q1.
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Mark, Mark... You're killin' me. Stop, please...
"Economy: Sharpest decline in 26 years
Economic activity shrank by 3.8% in last three months of 2008, according to the government's gross domestic product report."
I copied the above headline.
You are correct. This headline gives false information. Seems to be part of the normal pattern.
Is it willful deception or pure stupidity?
Below GDP numbers from US Deparment of Commerce:
GDP in billions of chained 2000 dollars
2007q4 11,620.7
2008q1 11,646.0
2008q2 11,727.4
2008q3 11,712.4
2008q4 11,599.4
Difference from q4 2008 to q4 2007 = 0.1572% in other words its 99.85% of what GDP was in q4 2007
Can you explain why this feels so much worse than .1572%?
Here is an article from BusinessWeek that indicates that US GDP numbers are being miscalculated.
It seems the US government counts offshored production via American subsidiaries as part of US GDP.
This I think explains why healthcare costs in America have risen from 6% of GDP to 15% of GDP.
Healthcare cost is relatively fixed and not affected by trade.
Hence if it goes up as a percentage of the US economy then the US economy in real terms is shrinking.
So actually American GDP numbers are enormously overstated.
Our real economy is less than half of what the government says.
I have lived in America for 15 years and watched continuous decline but keep hearing how huge the US economy is and growing. You living in Flint must have seen even worse. Why don't our economists come up with some correct numbers?
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