GDP etc. in a deep funk

By the way, here’s a graph of actual real U.S. GDP and its major components relative to their long-term (1970–2007) trendlines through the end of 2013. Note how things fell off a cliff in the recession. GDP, consumption, and government spending are all about 15% below where they’d be had they continued to grow in line with their long-term trend. (The hysteria over out-of-control government spending looks ludicrous in the light of this graph.) Investment is about 25% below where it “should” be. thanks largely to the housing collapse, though it’s staging… Read More

Response to Rasmus

Here’s my response to Jack Rasmus’ complaint about my fact-checking him (“GDP revisions: not a conspiracy, Jack”). His words are in purple italics; mine, in normal type. GDP for 2012, as I pointed out in my prior article, ‘Economic Recovery by Statistical Manipulation’, was raised by almost 33% as a result of the BEA revisions–from the 2.1% annual growth to 2.8%. GDP wasn’t revised up by almost 33%—it was more like a tenth that. Rasmus means that the growth rate was revised up by 33% (no almost about it). It’s a minor error, but… Read More

GDP revisions: not a conspiracy, Jack

The irrepressible Jack Rasmus, who never tires of displaying his ignorance, has a piece up on Counterpunch (“Economic Recovery by Statistical Manipulation”) on the recent revisions to the U.S. national income and product accounts (NIPAs). No doubt speaking for legions of paranoids, left and otherwise, Rasmus describes the revisions as yet another politically driven scheme to make the economy look better than it is—“rewrit[ing] the numbers to make the failure ‘go away.‘” They’re not, and they don’t. Like almost all economic stats, the national income numbers—GDP and its supporting cast—are revised frequently… Read More

Fed sees a gloomier future

The Federal Reserve is just out with its latest economic projections. Since the last edition in June, they’ve turned gloomier for the short, medium, and long term. They see growth as slower, and unemployment as higher, for 2011, 2012, 2013, and for the “longer run” than they did just three months ago. For this year, they’re looking for GDP growth to average 1.6–1.7%, compared with a projection of 2.7–2.9% in June. They see unemployment as staying in its current 9.0–9.1% range, instead of falling into the high 8s. For next year, they… Read More

StimPak still stimulating

The Congressional Budget Office (CBO) is out with its latest estimates of the effects of the stimulus package—officially the American Reinvestment and Recovery Act (ARRA)—on employment and incomes. For the fourth quarter of 2010, the CBO estimates that ARRA: raised real GDP by 1.1–3.5% lowered the unemployment rate by 0.7–1.9 points increased the number of people employed by 1.3–3.5 million increased the number of full-time equivalent jobs by 1.8–5.0 million above what would have happened without ARRA These are substantial numbers. Take GDP. The midpoint of the estimate is 2.3%. Real GDP is… Read More

Radio commentary, April 30, 2009

A review of some of the headlines before hitting some big-picture stuff. unemployment claims: easing a tad More tentative signs of some slight gloom-lifting in the job market. First-time claims for unemployment insurance filed by people who’ve just lost their jobs fell by 14,000 last week, and the four-week average is now about 20,000 below its high, set last March. As I’ve noted here before, the yearly percentage change in these weekly initial claims figures has proven a pretty reliable early warning sign that a recession is drawing to a close, and that… Read More