Posted on 05/30/2011 12:47:35 PM PDT by The Magical Mischief Tour
The headline GDP numbers the government releases every quarter are "real," meaning that they are adjusted for inflation.
The most recent real GDP number, for Q1, was weak: It was only 1.84% (annualized). If this were an ordinary recovery following a deep recession, the economy would likely be growing 5%-7%. This is why the recovery doesn't feel like a recovery.
But even that 1.84% GDP number doesn't tell the whole story.
(Excerpt) Read more at businessinsider.com ...
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When did they take out fuel and food out of inflation ?
‘When did they take out fuel and food out of inflation ?’
Doesn’t matter, really. Since the cost of fuel factors into the cost of production it will push it higher. They cannot run from their stupidity.
Back in the early 80’s. Fuel and food price fluctuate so much they exclude them from “core inflation” numbers and then target the core rate for purposes of policy. The approach has actually worked pretty well for 30 years.
That was the eighties when this started and we didn’t have double digit inflation. It would never have worked in the seventies. We are back to the bad times. Bring it back, so people know. Inflation or stagflation is upon us.
From wiki:
When the Federal Reserve announced in 2005 that they would cease publishing M3 statistics in March 2006, they explained that M3 did not convey any additional information about economic activity compared to M2, and thus, “has not played a role in the monetary policy process for many years.” Therefore, the costs to collect M3 data outweighed the benefits the data provided.[15] Some politicians have spoken out against the Federal Reserve’s decision to cease publishing M3 statistics and have urged the U.S. Congress to take steps requiring the Federal Reserve to do so. Libertarian congressman Ron Paul (R-TX) claimed that “M3 is the best description of how quickly the Fed is creating new money and credit. Common sense tells us that a government central bank creating new money out of thin air depreciates the value of each dollar in circulation.”[23] Some of the data used to calculate M3 are still collected and published on a regular basis.[15] Current alternate sources of M3 data are available from the private sector.[24]http://en.wikipedia.org/wiki/Money_supply
Whats worse is that most of the “money” in the US is not in the form of currency, only about 5% is. The rest are jsut numbers, and THOSE are a LOT easier to fudge.
In addition, the BLS uses magic tools such as hedonics, owner rent equivalence, substitution, quality adjustments, geometric weighting to change the CPI from a tool measuring the cost of maintaining a set standard of living to the cost of a declining standard of living.
Plus, buy something cheap from China and ship it to a store in America where you sell it at a higher price and...Voilà!...you have suddenly increased the American GDP.
It’s not a meaningful measure of production.
Over those 30 years food fuel has been up and down but food pretty much up. If they did not exclude them the overall situation regarding inflation would be much much worse. I firmly believe all politicians like the numbers as tame as possible to enhance re election prospects. This is no different from excluding discouraged workers from the labor pool in order to keep that figure lower. That was done in the early 90’s before the widespread penetration of computers into homes which of course made that maneuver somewhat inconsequential although as we both know,too many uneducated out there that will simply listen to the government line.
bm
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