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Post by rjfliberal07 on Jul 27, 2007 10:34:00 GMT -6
Can anyone explain how the G.D.P rose 3.4% in the second quarter with housing collapsing, CDOs, LBOs becoming harder to do, and inflation that is high, but under reported? Is it due to a "surge" in defense spending? Why can't the G.D.P have it listed excluding Defense Spending, just like the Bogus C.P.I when they exclude non- essential items such as food and energy?
Could the reason the G.D.P seems higher than it is is because inflation is underreported, thus making G.D.P growth seem higher than it really is?
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Post by unlawflcombatnt on Jul 27, 2007 12:54:00 GMT -6
Could the reason the G.D.P seems higher than it is is because inflation is underreported, thus making G.D.P growth seem higher than it really is? Yes. Understatement of inflation (the GDP deflator) is a very simple way to overstate the GDP. The mechanisms the BEA uses to do this are legion. There are so many manipulations in today's GDP report that I'm going to have to write a separate post to go into them. There have been downward revisions to the quarterly GDP for at least the previous 5 quarters. GDP growth for all of 2006 was revised downward from 3.3% to 2.9%. (See Table 1A, page 11, of the current GDP report ) GDP for the 1st quarter of 2006 was downwardly revised from 5.6% to 4.8%. 2nd quarter 2006 GDP growth was revised downward from 2.6% to 2.4%. 3rd quarter 2006 GDP growth was revised downward from 2.0% to only 1.1% 4th quarter 2006 GDP was revised down from 2.5% to 2.1%. 1st quarter 2007 GDP was revised downward from 0.7 to 0.6% All of the quarterly Final Sales and PCEs (Personal Consumption Expenditures) were downwardly revised. It took a real Houdini to get the current quarter's GDP growth up to 3.4%. Obviously it was made easier by the fact that 1st quarter GDP growth was only 0.6%.
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Post by unlawflcombatnt on Jul 28, 2007 2:53:15 GMT -6
Most of the the 2nd quarter GDP increase, compared to the first quarter, is due to the reduction in the inflation calculation (the GDP Price Index), which was 4.2% for the first quarter, and only 2.7% for the 2nd quarter. From page 3 of the text of the current GDP report: "Current-dollar GDP -- the market value of the nation's output of goods and services -- increased 6.2 percent, or $204.0 billion, in the second quarter to a level of $13,755.9 billion. In the first quarter, current-dollar GDP increased 4.9 percent, or $159.6 billion." Despite the alleged increase in 2nd quarter GDP of 3.4%, vs. 1st quarter GDP increase of 0.6%, the current dollar increase was only 28% more than that of the 1st quarter (where the "real" increase was only 0.6%.) In addition to the smaller increase in Personal Consumption Expenditures during the 2nd quarter, even less of it was financed by income. In fact, Personal Consumption Expenditures exceeded Disposable Income more in the 2nd quarter than in the 1st quarter. Real Disposable Personal Income decreased $17 billion (-0.8%), from $8,633 billion in the 1st quarter down to $8,616 billion in the 2nd quarter. This compares to an increase of 5.9% in the 1st quarter. (See Table 10, page 26, of GDP report. ) ___________ Downward revisions to 2006 are also worth noting. "Current-dollar GDP was revised down for all 3 years: $26.6 billion, or 0.2 percent, for 2004; $21.9 billion, or 0.2 percent, for 2005; and $51.9 billion, or 0.4 percent, for 2006...." National income was revised down $55.4 billion, or 0.5 percent, for 2006. This would knock 0.4% off of 2006 GDP growth. Without this downward revision for 2006, 1st quarter 2007 GDP growth would have been nearly 0.
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Post by rjfliberal07 on Jul 28, 2007 22:53:37 GMT -6
I thought G.D.P growth of decline is from the previous quarter of last year? Or is is from just taken from the most previous quarter?
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Post by unlawflcombatnt on Jul 29, 2007 0:39:18 GMT -6
The quarterly changes are compared with the previous quarter's changes.
Interestingly enough, 2nd quarter real GDP (annualized) was actually less than the previously published GDP for the 4th quarter. Or, to expand on this somewhat, GDP would have declined for the 1st half of 2007, if 4th quarter annualized GDP not been revised downward.
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