American Economy (thus world economy)

[Jackson50]

NJ5 said:

Jackson50 said:

 

That guy is simply calling a conspiracy where there is none. He said it does not add up, but provides nothing to showcase that.

That petroleum prices skyrocketed in the 2nd quarter is congruous with pushing down the GDP deflation rate...which is exactly what the BLS numbers showed. I am not saying this is good for the economy. Some feel uncomfortable with the idea that higher oil prices increase GDP. They may be right to be concerned, as deep down it doesn’t really make sense; but to say the government fudged the numbers is a conspiracy theorist's pipe dream and nothing more.

 

I don't care about the conspiracy angle of the story, that's really secondary. What matters more is that the GDP growth figure is irrelevant as it was calculated.

Obviously that didn't stop the whole media from reporting the number without talking about the issues behind it. Mass misinformation at its finest.

PS: It's not true that the author didn't provide anything. There's plenty of reasoning and information behind his conclusion.

 

 

I said he provided nothing in regards to his statement that the numbers do not add up. Also, to say that

"In other words, to arrive at a 3.3% growth rate, the government assumed that inflation is running at a ten-year low! In contrast, the latest reading on consumer prices (CPI) in the second quarter shows year-on-year inflation running at a 5.6% rate, a seventeen-year high! How can it be that inflation is simultaneously running at a seventeen-year high and a ten-year low?"

shows he does not understand how the GDP deflator actually works. Since the US imports half of its oil, the GDP deflator will go down when there is a spike in oil prices. This is what happened in the 2nd quarter; April, May and June all saw skyrockiting oil prices. This has a weird effect by driving down the GDP deflator whilst concurrently driving up the price index. This is why it appears as if the government is using artificially low inflation numbers in its GDP calculation. There may be somewhat of an inherent bias built into the way it is calculated, but there is no grand conspiracy.