finally some reality
GDP Growth: Are The Numbers Too Rosy?
That evidence is popping up in several measures, including income and manufactured imports. But the most intriguing is summed up in one figure. From 2002 to 2003, U.S. imports of services from abroad, adjusted for inflation, didn't grow at all -- a nice, round 0% change. That comes after only 1.4% reported growth in 2002. That seems implausible. Take one key component of service imports: U.S. companies' transfers abroad of a range of service work, including computer programming, customer support, tax-return preparation, and research and development.
While still small, such "offshoring" is rapidly growing. Yet it's not fully accounted for in government statistics -- an overlooked case of the government getting the numbers wrong. Just one example: The Commerce Dept. reports that Americans paid just $209 million in 2002 to unaffiliated companies in India for business, professional, and technical services. But five big Indian tech-service companies -- Tata Consultancy Services, Infosys Technologies (NasdaqNM:INFY - News), Wipro Technologies, Satyam Computer Services (NYSE:SAY - News), and HCL Technologies -- report that their sales to North America that year were around $2.4 billion. Presumably not much of that came from Canada or Mexico.
In national accounts, imports reduce GDP. So if service-sector imports are undercounted, GDP growth is probably overstated. That, in turn, could explain part of the gap between reported GDP growth and the much weaker gains in payrolls.
By themselves, service imports are a small portion of the economy. At most, any error on service imports would only add a tenth of a percentage point or so to GDP growth. But signs of a mismeasurement in that category give reason to think that broader miscalculations could have overstated recent GDP growth by as much as a full percentage point a year. That's meaningful: A difference of one percentage point in GDP growth equals about 60,000 jobs a month.
biz.yahoo.com
So we really have 2-3% GDP if that. Sounds more like it. |
