Posted by Larry Doyle on July 30th, 2014 9:45 AM |
Most pundits and analysts will understandably try to hype the better than expected 4% growth rate of 2nd quarter GDP reported this morning.
I get it.
Some might temper the hype by highlighting that growth in inventories accounted for approximately 1.7% of the growth. Others might choose to direct attention to the fact that the disappointing 1st quarter GDP was actually revised to a -2.1% level from the -2.9% posting previously reported. Still others will point toward the positive developments within the consumer spending data.
Yes, most of this information has a positive bent to it but is this to say that we have a meaningfully positive trending economy that will drive growth in full-time, high paying jobs? (more…)
Posted by Larry Doyle on June 26th, 2014 8:37 AM |
Anyone with a modicum of ‘sense on cents’ is well aware of the maxim ‘garbage in, garbage out.’
If we are to believe that the inflation data reported by Uncle Sam does not properly capture the true level of price increases in our economy — did somebody say intentionally misleading — then the immediate question begs, what is the real level of economic activity in the nation?
Recall that real GDP is defined as:
A measure of economic growth from one period to another expressed as a percentage and adjusted for inflation (i.e. expressed in real as opposed to nominal terms). The real economic growth rate is a measure of the rate of change that a nation’s gross domestic product (GDP) experiences from one year to another.
If inflation is under reported, and the rate of change in our economic growth is a known figure, then by definition the output (that is, real GDP) will be overstated. So I repeat my question: What is the real level, that is a more honest and accurate assessment, of our 1st quarter GDP? (more…)