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GDP, Real GDP, and Shadowstats "Theater of the Absurd" GDP
Townhall.com ^ | June 1, 2012 | Mike Shedlock

Posted on 06/01/2012 3:11:49 PM PDT by Kaslin

Every month Doug Short at Advisor Perspective writes an excellent report on GDP. With today's release of the Q1 GDP Second Estimate, Doug Short has a new column worth a good look: Will the "Real" GDP Please Stand Up? (The Deflator Makes Big a Difference).

How do you get from Nominal GDP to Real GDP? You subtract inflation. The Bureau of Economic Analysis (BEA) uses its own GDP deflator for this purpose, which is somewhat different from the BEA's deflator for Personal Consumption Expenditures and quite a bit different from the better-known Bureau of Labor Statistics' inflation gauge, the Consumer Price Index.

The Lower the Deflator, the Higher the GDP

I have a note at the bottom showing the real GDP calculation method. Suffice to say that the higher the increase in compounded annual percentage change in the deflator, the lower the real GDP. Conversely the lower the increase (or if there is a decrease), the higher the real GDP.
GDP Four Ways

Doug Short calculates the GDP using four different deflators.

  1. GDP deflator (official number) : GDP +1.86, 10-Yr Moving Average +1.7
  2. PCE deflator (personal consumption expenditures) : GDP +1.13, 10-Yr Moving Average +1.6
  3. CPI deflator (consumer price index) : GDP +1.05, 10-Yr Moving Average +1.4
  4. Using John Williams' Shadowstat measure of inflation  : GDP -10.50, 10-Yr Moving Average -5.1

The first three charts are all similar looking but charts 2 or 3 seems more reasonable than the official numbers. Here are two of the charts.

Real GDP Using PCE



click on chart for sharper image

Shadowstats GDP



click on chart for sharper image

Doug Short Writes ...

I find this "alternate Real" GDP to be interesting (in a bizarre sort of way), but I personally see no credibility in the hyper-negative GDP it produces. On the contrary, I see this chart as further evidence that the alternate CPI, despite its popular among many critics of government data, is a misguided concept.Alternate Nonsense

Bizarre is a polite way of putting things. I would call it total nonsense. To believe Williams one would have to the economy was in a recession the vast majority of the time for the last 25 years.

Williams has a huge following, mainly by the hyperinflationist crowd. Williams himself has been predicting hyperinflation for some time.


All of the hyperinflation calls have been missed by a mile. The dollar is strengthening, consumer credit is once again sinking, and treasury yields just made 60-year lows.

This is what happens when you fail to take into consideration:


Williams makes all of those mistakes, being far too US-centric in his analysis, and compounds the errors by methodology that produces the absurd results shown above and also by confusing unfunded liabilities with debt.

$1.06 Trillion of Consumer Debt is Currently Delinquent

Note that according to the latest HOUSEHOLD DEBT AND CREDIT report by the Fed, consumer credit other than student debt is contracting. Also note that $1.06 trillion of consumer debt is currently delinquent, with $796 billion seriously delinquent.

Think that will be paid back? I don't. And Hyperinflationists fail to understand the ramifications.

I happen to agree that the US has a day-of-reckoning coming, but the entire fiat global financial system fueled by insane levels of fractional reserve lending will come crashing down at the same time.

That is precisely why this deflationist (unlike others) happens to like gold as a safe haven.


TOPICS: Business/Economy; Editorial
KEYWORDS:

1 posted on 06/01/2012 3:11:52 PM PDT by Kaslin
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To: Kaslin

I prefer to invest in lead, as in ammo. Then I can take your gold if I need it.


2 posted on 06/01/2012 3:20:48 PM PDT by brent13a (Glenn Beck is an a$$hat.)
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To: brent13a
I prefer to invest in lead, as in ammo. Then I can take your gold if I need it.

You may be saying that in jest, but at some point it will be all too real and common.

It should be a warning to those who think that conservatives will hang together and win a CWII.

We don't have a common tradition of honor and morality any more.

A joke about theft and murder of fellow Freepers seems funny to you?

Shining City on the Hill has become Lord of the Flies.

3 posted on 06/01/2012 3:39:54 PM PDT by sam_paine (X .................................)
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To: brent13a
I prefer to invest in lead, as in ammo. Then I can take... You may wanna re-think your tag line. I mean if Glenn's an a$$hat (knowing who he is) and you're offering the above - do you really wanna advertise?
4 posted on 06/01/2012 4:25:21 PM PDT by SwankyC
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To: sam_paine
Shining City on the Hill has become Lord of the Flies

...ouch

5 posted on 06/01/2012 4:28:05 PM PDT by SwankyC
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To: sam_paine

sam_paine seems to have an accurate assessment of the situation....


6 posted on 06/01/2012 4:29:39 PM PDT by pointsal
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To: brent13a

It’s nice when a Freeper reveals himself to be nothing more than a scumbag looter early in the game. Thanks.


7 posted on 06/01/2012 4:31:34 PM PDT by Lurker (Violence is rarely the answer. But when it is it is the only answer.)
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To: brent13a; Kaslin
brent13a: I prefer to invest in lead, as in ammo. Then I can take your gold if I need it.

Oh fantastic! Third and final brent13a post to go along with that sweet thought.

Colin Powell expresses support for gay marriage
Wednesday, May 23, 2012 5:52:24 PM · 44 of 62
brent13a to LeoWindhorse
As a law enforcement officer I run into a fair share of homo-couples in the line of duty. .....

So lo and behold. The lovely freeper who has been on threads all week chastising people left and right for not taking heed of His Word turns out to be a LEO just joshing about murder and larceny.

Why would I take the time to link all this? Perhaps He is working through me to help brent see His light more, well, consistently. Anyone he's arresting tonight is praying, surely, while they are at brent's mercy.

8 posted on 06/01/2012 4:33:23 PM PDT by sam_paine (X .................................)
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To: sam_paine
Apparently you are unfamiliar with your local Tea Party. I live in a rural area. Have for the last 12 years. I have married (niece) into old local clans. We are going to stick together. We already talk about it some now. There will be some resistance to outsiders at first but we have some very smart people down here. FReepers will by definition be welcome in our haven. I know other areas of the country, especially, cities will be insane if this thing fall apart. But keep the faith. What do you mean we don't have a common tradition? Good luck and I hope you post was sarcasm.
9 posted on 06/01/2012 4:33:46 PM PDT by prof.h.mandingo (Buck v. Bell (1927) An idea whose time has come (for extreme liberalism))
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To: prof.h.mandingo

Did you read that guy’s post above? Turns out he’s a cop. Of course there’s good people out here. But there’s a lot of sob’s too who are itching to get a chance to cut a throat or too. Doesn’t seem to matter to them who it is, friend or foe.


10 posted on 06/01/2012 4:40:35 PM PDT by sam_paine (X .................................)
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To: Lurker; SwankyC; sam_paine; pointsal

Yep thats what I obviously meant: looting. That’s me, a murdering privateer.

It wasn’t that I referencing the fact that if the ‘worst’ happens the things that will be worth more than gold will be: food, clean water, ammunition.

Who cares about gold when your family is starving or dying from dysentery because theres no clean water?

Who cares about gold if you have no guns or ammunition to protect it or maybe your family?

Nope, that’s me, I’m just waiting for the end times so I can go about serial killing everybody.....yep that would be me.

Beck is an a$$hat because for every minuscule instance that he utters something decent or valid he wildly invalidates it by running off at the mouth with blithering stupidity.


11 posted on 06/01/2012 6:15:39 PM PDT by brent13a (Glenn Beck is an a$$hat.)
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To: brent13a

Oh great. You’re a cop. Shoot any family dogs lately?


12 posted on 06/01/2012 8:07:24 PM PDT by Lurker (Violence is rarely the answer. But when it is it is the only answer.)
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To: sam_paine
I agree and sorry if I misinterpreted your post. BTW I'm ex LEO also, State Police variety.
13 posted on 06/02/2012 2:39:55 AM PDT by prof.h.mandingo (Buck v. Bell (1927) An idea whose time has come (for extreme liberalism))
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To: brent13a; Lurker; SwankyC; pointsal
...that’s me, I’m just waiting for the end times so I can go about serial killing everybody.....yep that would be me.

1) You call yourself a cop. Might be a lie, might not.

2) You critique others for how they praise God. Not sure if you have a Bible or just do searches on google.

3) You make jokes about having ammunition on hand so you can take other people's property when the opportunity arises during chaos.

Don't know when you are lying, and don't know what you will really do when chaos hits, and not sure if you'll be wearing your uniform when you make those choices, but it's pretty clear in the here and now: you most certainly are a creep.

14 posted on 06/04/2012 6:53:44 AM PDT by sam_paine (X .................................)
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