If an increase in GDP is temporary. Then when it ends GDP will go down. The actual GDP figures will "count" this negative factor by showing the GDP going down.
Year 1, GDP 100, Year 2 GDP 110, Year 3 GDP 100.
The decrease gets measured. You get an increase of 10%, followed by a decrease of a bit over 9% (off a larger base so its the same size).
You count the 10% increase as real, and then the later 9.09% or so decrease as real.
But your post awhile back discounted the growth that was seen as temporary or unsustainable. In my example above all the growth is temporary or unsustainable. So if you discount all of it, you have a growth of zero percent going from year 1 to year two. Your counting the negative factor of the growth being unsustainable as the growth happens by reducing the recorded growth rate from 10% to 0%.
But if you count it then, you can't reasonably count it again. You only have one drop from 110 to 100, not two. You can't reasonably say there was 0% growth in the first year, and around -9% growth in the second year. Its either 10% growth followed by a 9+% loss, or its 0%, then 0%, if you consider both changes temporary and your totally discounting temporary changes.
Personally I'd just use the straight GDP numbers, rather than trying to subtract and re-add whatever portion of changes you consider temporary. Then after reporting the straight numbers you can add commentary about how you think its only temporary and has set us up for future negative growth.
The other chart can show an "adjusted GNP" number net of mortgage equity withdrawals (which, although they are much down in magnitude from recent years, MEWs are probably still going on as a measurable effect right now. Some people are still drawing from their mortgages, it's probably much reduced though, most likely back closer to 'normal' historical levels now).
Mortgage equity withdrawals, aren't a temporary thing. They happen to a greater or less extent just about all the time. What was temporary was the inflated value of the houses. That's been largely reversed. |
