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To: slacker711 who wrote (72147)	5/22/2000 7:30:00 PM
From: Skeeter Bug	Respond to of 152472

>>1) The statistical numbers have been boosted by 100%. This means that GDP has been recently growing at roughly 2.5%.<< true. this is just a tad above 1970 and 1980 figures. >>2) This 2.5% growth is an acceleration from previous years in which growth was between 1.5-2%.<< no. the fed is raising rates due to the FEAR of future inflation, not just past inflation. i believe that gdp rose at a 7% clip in q4 1999. if you believe the 7% figure (that's the fed's story and they are sticking to it! ;-) then you have a serious issue. i believe the number was extremely biased due to last minute computer hardware purchases that popped the already bloated hedonic pricing multipler effect into the stratosphere. >3) This acceleration is due to the "wealth effect" caused by people thinking that the economy was actually growing faster than it really was.<< yes. however, the two largest inflationary targets were housing and the stock market itself. of course, the experts know that the price of eggs is more important to inflation than the price of a house or their retirement wealth. i don't know that. inflation in these two areas have been well into the double digits for quite some time. consumer goods have been sheltered from inflation due to the fact that many goods were in huge oversupply and the run on goods kept them from collapsing in price. >>The conclusion to your views is that you seem to think that 2.5% growth is too fast for this economy<< no. i'm actually fairly comfortable with consumer good inflation as it stands (alan might some more statistics to indicate future inflation than i am aware of - so i can't speak there). i do, and have had, a BIG issue with asset price inflation. it has been HUGE! for example, oracle's growth rate has been halved and their pe has doubled in 10 years. that is 300% inflation in ten years. my home has appreciated 15% annually for two years running - this is not unusual. i do take issue with inflation calculations, though. reducing the weighting of items that go up in price is silly. >>I dont see it....either the economy is experiencing inflationary growth or the numbers have been overstated. I dont see how you can come to the conlclusion that both have occurred.<< i didn't. gdp growth is overstated. productivity is overstated. inflation (inflation is not equal to gdp growth) is understated (by excluding asset inflation and reducing the weighting of items when their price increases). it sounds like i might not have been about gdp growth and inflation being two separate issues w/ their own dynamic.