Quote:
Originally Posted by Glitch
You can have a recession and still have 3% or more growth rate in the GDP, as long as the previous two quarters had a higher growth rate.
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At last a glimmer of truth, and not just a faint one either. Otherwise, this thread has been rife with error...
1. The definition of a recession is NOT two consecutive quarters of negative GDP growth. The definition is "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough."
NBER: Recession Dating Procedure
2. A GDP growth rate of 0.6% per annum is not mathematically negative, but it is hardly a postive development. Pretty pathetic would be a better choice of words. In the 57 full years beginning in 1950, there have been only 8 with growth rates worse than that (1954, 1958, 1970, 1974, 1975, 1980, 1982, and 1991). At least parts of all of those years were within a recession. Today's data definitely do NOT show that we are not in a recession.
3. Today's release was of the
Advance Estimate, not the
Preliminary Estimate. The latter will be released on May 29. The
Final Estimate will be released on June 26. That too will be updated going forward, as original data emphasizing timeliness are replaced by subsequent data emphasizing accuracy. Of particular note, data publicly reported by corporations will be replaced by data as they were reported to the IRS.
4. The 0.6% rate released today was within the range that was expected by experts. Certainly, some projections were lower. Some were also higher.
5. Neither the Congress nor the White House has any input or oversight at all that is relevant to the development and release of the GDP numbers.
6. The term "geometric weighting" is inaccurate. Real GDP is estimated in part by deriving a Fisher ideal index which is the geometric mean of two fixed-weighted indexes. This is a mathematically superior way of arriving at such a number. Similarly, hedonic regression is a means to identify and examine the components of a trend, most often used in isolating price from quality changes. Neither of these represents any "sleight-of-hand". They are both very well established techniques of mathematical statistics.
7. GDP is NOT calculated from the CPI. Instead, individual
Implict Price Deflators are created for every component of GDP at the lowest level of detail for which all of the necessary information is known. The resulting comprehensive index is the
GDP Deflator, which is the broadest price index available. Its scope is considerably larger than that of the CPI(U).
8. The CPI(U) does NOT exclude food and fuel. The more stable measure "core inflation" widely reported in the press does. The press also widely reports that consumer spending accounts for more than 70% of the economy. This does not mean that GDP excludes the corporate and government sectors, and neither does talk of "core inflation" mean that food and fuel are excluded from the CPI(U).
9. The actual CPI(U) is exactly what is reported by BLS each month. Notions that there is some superior measure of "real" or "actual" inflation that should be two to three times higher than what is reported are complete bunk.
Okay, that's all. So far...
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