Joined: Jan 2006 Gender: Male Posts: 6,327 Location: Southern California Karma: 180
GDP: Another Fake Increase « Thread Started on May 29, 2008, 1:45pm »
Today's 1st quarter GDP report showed an "increase" in 1st quarter GDP of +0.9%. This was an upward revision of the previous +0.6% estimate from 4/30/08. The upward revision added +$8.8 billion to the earlier estimate.
However, this upward revision was almost entirely the result of a reduction in US purchase of imports. Since imports subtract from GDP, the downward revision of $25.4 billion actually adds +$25.4 billion to GDP growth. To put it another way, the fact that Americans purchases "decreased" resulted in an "increase" in economic growth. This is a typical of the manipulations the government uses to overstate economic growth.
Not only is this a typical distortion of our economy, even the explanation of the reason for the "increase" deceiving. A perfect example of this deceptive language is provided by Briefing.com, in the following statement:
"The revised rate of 0.9% for Q1 GDP was due to an upward revision to net exports...."
Though the statement is technically true, it is deliberately deceptive. Net imports are the difference between exports and imports, or Exports - Imports = Net Exports.
In fact, actual exports declined by -$9.7 billion. However, since there was an even larger -$25.4 billion decline in imports, it resulted in an "upward revision to net exports".
-$9.7 billion - (-$25.4 billion) = +$15.7 billion
Since most Americans are struggling financially, their purchase of imports has declined significantly. These changes are shown in the graphic below from a copy of Briefing.com's GDP report, showing both the current numbers and the numbers prior to revision (labeled 4/30/08).
The numbers for Net Exports (or trade balance), total Exports, and total imports are in red. The changes from the upward revisions are shown in purple with purple arrows showing the direction of change.
The official numbers for 1st quarter GDP from the BEA can be found for the "advanced" report on page 7, Table 3 from 4/30/08 and on page 8, Table 3 for today's "preliminary" report (5/29/08).
Any claims being made by the Financial media that exports are increasing are false. Exports declined -$9.7 billion. The trade deficit improved only because of the huge decline in imports. Again, the import decline is almost the entire reason for the upward revision of 1st Q GDP from 0.6% (from 4/30/08) to 0.9% (on 5/29/08). Another factor contributing to the change is the +$4.7 billion revision of FOOD purchases by Americans, from the previous -$1.6 billion decline up to a +$3.1 billion increase. Thus, the combined addition of decreased import purchases and increased food purchases added a whopping +$30 billion to our 1st quarter GDP. Despite these revisions, the overall upward revision was only +$9.6 billion.
The reason the "increase" was no larger is because nearly every other area declined. Motor vehicle sales fell by -$2.5 billion. Personal Consumption Expenditures were changed less than a fraction of a %. The major reason our GDP "increased" is because our purchase of imports "decreased." Another concocted case of economic "growth" while the economic status of most Americans worsens.
Obama: "I wish I could vote [for] CAFTA....Amer. workers are afraid of globalization" "We need more trade....We shouldn't try to stop [globalization]""I don't accept...that illegal immigration suppresses wages";US Employment / Real Weekly Wages
Joined: Jan 2006 Gender: Male Posts: 6,327 Location: Southern California Karma: 180
Re: Another fake GDP increase « Reply #1 on May 29, 2008, 2:50pm »
In the previous post, the import & export numbers are from the Bureau of Economic Analysis (BEA). Trade balance numbers are also reported by the Census Bureau. The Census Bureau numbers are usually the final word on the trade balance, imports, and exports. Often, however, Census Bureau numbers are not available for the most recent period included in the GDP report. In those cases, the BEA simply guesses at the number, and uses it in the GDP report.
For the month of March, US imports fell -$6 billion. That's an annualized decline of -$72 billion.
Again, the main reason for our 1st quarter GDP increase of $26.2 billion, or +0.9% annualized, was the decline in imports of -$13 billion, or an annualized -$52 billion, for an addition to GDP of +$0.44%.
In fact, the change in imports from the initial Q1 estimate was -$25.4 billion, declining from +$12.4 billion on the 1st report (on 4/30/08), down to -$13.0 billion on today's report. This is a change of 0.87%.
Without the import change, the 1st quarter GDP increase would have been only $0.8 billion, not $26.2 billion. This would have made 1st quarter GDP growth only +0.03%, instead of +0.90%.
In other words, without today's change in import numbers, 1st quarter GDP would have been approximately 0.
Obama: "I wish I could vote [for] CAFTA....Amer. workers are afraid of globalization" "We need more trade....We shouldn't try to stop [globalization]""I don't accept...that illegal immigration suppresses wages";US Employment / Real Weekly Wages
It is getting harder and harder to believe anything put out by our lying, corrupt politicians and government.
Government agencies that are supposed to disseminate information have become nothing more than propaganda organizations. If there's any way to put a positive spin on anything, the government leads the charge.
I'm getting really tired of hearing how they need to instill "confidence" in consumers.
How about just giving us the facts, and leave the spin for Wall Street advertising agencies.
Obama: "I wish I could vote [for] CAFTA....Amer. workers are afraid of globalization" "We need more trade....We shouldn't try to stop [globalization]""I don't accept...that illegal immigration suppresses wages";US Employment / Real Weekly Wages
Re: GDP: Another Fake Increase « Reply #5 on May 31, 2008, 12:32pm »
What else do you expect from these agencies? They're supposed to be the cheerleaders for the economy, even if that means manipulating a few numbers to avoid facing the facts of reality that we are in a recession. It's sad really, but thanks for putting up this article. I always wondered where the growth in our GDP occured; I figured something was fishy and this article proves it.
What else do you expect from these agencies? They're supposed to be the cheerleaders for the economy, even if that means manipulating a few numbers to avoid facing the facts of reality that we are in a recession.
"Cheerleaders for the economy" pretty much sums it up.
It might be helpful if I re-stated and summarized the main points from the original post.
1. Most GDP "growth" came from a decrease in Imports.
2. Increased Food purchases made a smaller, but significant contribution.
GDP was revised upward because US purchase of imports was revised downward by a whopping -$25.4 billion, from the original estimate of Q1 GDP from 4/30/08. Since imports subtract from GDP, this "decline" caused a dollar-for-dollar "increase" in US GDP. To put it another way, a -$25.4 billion DECLINE in American spending (on imports) caused a +$25.4 billion GAIN in GDP.
Q1 GDP growth is currently stated as +$26.2 billion. Subtracting the $25.4 billion import change would reduce Q1 GDP to only $0.8 billion. This would give an annualized growth of only 0.02%. This is approximately 0% GDP growth.
But there's more. Growth in food purchases was also revised upward by +$4.7 billion, from -$1.6 billion on 4/30/08 to +$3.1 billion on 5/29/08. If this $4.7 billion is also subtracted (along with the import change), then Q1 GDP growth is reduced to -$3.9 billion. This gives an annualized GDP growth of -0.033%.
Without the upward revisions from Imports and Food purchases, 1st quarter GDP would have contracted by -0.033%.
The concocted Q1 GDP growth was solely the result of American consumers buying fewer imports, and paying higher prices for food.
There was no actual growth. The reported "growth" was nothing but a statistical anomaly. The American economy is contracting.
Obama: "I wish I could vote [for] CAFTA....Amer. workers are afraid of globalization" "We need more trade....We shouldn't try to stop [globalization]""I don't accept...that illegal immigration suppresses wages";US Employment / Real Weekly Wages
Joined: Jan 2006 Gender: Male Posts: 6,327 Location: Southern California Karma: 180
Re: GDP: Another Fake Increase « Reply #7 on Jun 17, 2008, 1:41pm »
Upon further review, it appears that even the published +$26.2 billion for Q1 GDP growth was mis-calculated too high -- overstating GDP growth by $10.2 billion.
The real total GDP growth, based on the BEA's own numbers, should have been only $16 billion, not $26.2 billion.
It is over $10 billion too high, based on the actual calculations of Personal Consumption Expenditures, which totaled only $13 billion, not the $20.6 billion as claimed by the BEA; while Gross Private Investment was also miscalculated, making the actual decline -$32.4 billion, not the -$29.8 billion claimed by the BEA. (For the actual numbers, see page 8, Table 3 of the GDP report from 5/29/08
Here are the individual components for both Personal Consumption Expenditures (PCEs) and Gross Private Investment:
For PCEs: -$19.9 billion Durable Goods + -$2.0 billion NonDurable Goods + +$35 billion Services = +$13 billion (not +$20.6 billion) This subtracts -$7.6 billion from the mis-calculated $26.2 billion
For Gross Private Investment: -$36.3 billion Fixed Investment + +$3.9 billion Private Inventories = -$32.4 billion (not -$29.8 billion) This subtracts another -$2.6 billion from the mis-calculated $26.2 billion GDP increase.
So actual GDP growth for Q1 2008 should be $26.2 billion - $2.6 billion - $7.6 billion = $16 billion (not +$26.2 billion). This makes 1st quarter GDP growth only +0.55% (not +0.9% as is currently stated.)
Below is a modified, partial copy of the page 8, Table 3 from the latest GDP report. The totals for Personal Consumption Expenditures are underlined in dark red. The individual components that are supposed to make up the totals are underlined in orange. The Personal Consumption Expenditure section and Gross Private Investment sections are separated by bold black lines.
Again, note that the numbers in orange do not add up to the number in red.
Even this mis-calculation, however, gives a GDP that overstates true economic growth.
As stated earlier, GDP would be even lower, if not for the -$13 billion decline in Consumer Spending on Imports. Without this $13 billion "decline", which adds +$13 billion to GDP, Q1 growth would have been only $3 billion, or only an annualized +0.026%.
Obama: "I wish I could vote [for] CAFTA....Amer. workers are afraid of globalization" "We need more trade....We shouldn't try to stop [globalization]""I don't accept...that illegal immigration suppresses wages";US Employment / Real Weekly Wages
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