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To: Ilaine who wrote (88544)	4/2/2001 11:34:39 AM
From: LLCF	Read Replies (1) \| Respond to of 436258

Part of the problem with the hedonic adjustments comes from the distilled numbers... ie. "real growth" in tech spending/investment for instance.... vs other industries, makes it look as though there are all sorts of orders for new companies to take advantage of... ie. "spending in the network sector is exploding"... "buy CSCO"... yea right. Example: Nominal investments [dollars you and I could chase after if we started a company] in computers and peripherals forse about 10% per year between 1995-1999.. in "real" dollars??? 45% per year. DAK

To: Ilaine who wrote (88544)	4/2/2001 6:56:41 PM
From: Mike M2	Respond to of 436258

CB, you are looking at the wrong number 5% GDP growth in a $9.5 trillion economy = $475 billion in growth . Now if we take $ 127 billion in chained $ and subtract $ 28 billion in nominal $ actually spent we see that hedonics add almost $ 100 billion over 6 quarters so annaulize it ( 100 B$ * 4/6) = 66.67 billion. I would not call this miniscule. The impact of the hedonic deflator is more substantial over different time frames. we must also remember that to the extent inflation is understated real GDP and productivity is overstated. PS the 5% GDP and 9.5 trillion numbers are not intended to be precise - i only wanted to illustrate my point.mike