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Strategies & Market Trends : The Residential Real Estate Post-Crash Index-Moderated
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To: Les H who wrote (23671)5/29/2011 3:57:13 PM
From: TH1 Recommendation  Read Replies (1) of 119361
 
LH,

Many good things, but this is one at the heart of the entire con.

Bulls smoking crack if they think GDP, even with the massive Fed/Government stimulus, is actually positive. It's not.

<Gaming the GDP Numbers

I know I should quit, but this one quick note, as this just really annoys me. I get the methodology and rationalization of how GDP is calculated, but it does have the appearance of being “gamed.” This from my friends at Consumer Metrics. Link to the full report after.

“The importance of the price deflater used by the BEA cannot be overstated. In calculating the "real" GDP the BEA continued to use an overall 1.9% annualized inflation rate, which is substantially lower than the inflation rates being reported by any of the BEA's sister agencies. The mathematical implications of the deflater are simple: a lower deflater creates a higher ‘real’ GDP reading. If April's CPI-U (as reported by the Bureau of Labor Statistics) of 3.2% year-over-year inflation is used as the deflater, the reported 1.84% annualized growth rate shrinks to a 0.56% annualized rate, and the ‘real final sales of domestic products’ is actually contracting at a 0.63% rate. If instead of the year-over-year CPI-U we were to use the annualized CPI-U from just the first quarter (5.7%), the ‘real’ GDP would be shrinking at a 1.82% annualized rate, and the ‘real final sales of domestic products’ would be contracting at a recession-like 3.01%.” (http://www.consumerindexes.com/)>

GT
TH
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