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The Government and Media Are Lying About Today's GDP Number.
Politicket | 07/31/2009 | politicket

Posted on 07/31/2009 9:07:59 AM PDT by politicket

Folks, it’s COMPLETE manipulation of the numbers taking place. Here are the facts to prove it:

Here’s today’s GDP report: GROSS DOMESTIC PRODUCT: SECOND QUARTER 2009 (ADVANCE ESTIMATE).

Please note that GDP is reported on a “Quarter-Over-Quarter” basis instead of “Year-Over-Year”. However, the number is “annualized” (multiplied by 4), and it is based off of the previous quarter’s GDP.

Let’s crunch the numbers….

Please notice on the very first page of the report how first quarter GDP WAS REVISED TO -6.4% FROM ITS ORIGINAL -5.5%!

In other words, ALL of the numbers for the second quarter were BASED ON the revised number from the first quarter.

Let’s find the actual GDP drop for the first quarter, since it was reported in an annualized fashion: -6.4% / 4 = -1.6% for Quarter 1

OK, now they’re saying that the GDP drop for the second quarter was -1.0% annualized, or: -1.0 / 4 = -0.25% for Quarter 2

Put all of this in real dollars. Let’s pretend that the GDP for the U.S. was $100 at the beginning of 2009. After the first quarter our GDP would be reduced by 1.6%: $100 – ($100)(1.6%) = $100 - $1.60 = $98.40.

The second quarter GDP is based on the results from the first quarter GDP. So now we have $98.40 that gets reduced by 0.25%: $98.40 – ($98.40)(0.25%) = $98.40 - $0.25 = $98.15.

Our TOTAL GDP thus far in 2009 (six months) will have decreased from $100 to $98.15, or -1.85%. Our annualized GDP loss for 2009 based on this number would be -1.85% x 2 (two six month periods) = -3.7% (A depression would be an annualized loss of -10%).

But remember, all of these numbers are based on the FIRST QUARTER REVISION DOWN TO -6.4%. What if we use the original -5.5% first quarter GDP number? What would the second quarter GDP have been to give us our -3.7% annualized drop in GDP that we just calculated?

Here are the numbers:

A first quarter annualized GDP loss of -5.5% would equate to a quarterly loss of: -5.5% / 4 = -1.375%.

Using our example from above where 2009 GDP starts out at $100 we have a value of: $100 – ($100)(1.375%) = $100 - $1.38 = $98.62.

Now here’s the QUESTION OF THE DAY! We still need to get our final GDP number down to $98.15, like we had in our first example. This will take another drop of: $98.62 - $98.15 = $0.47 to get there! WHAT PERCENTAGE DROP FROM $98.62 WILL IT TAKE FOR US TO GET THERE? In other words: $98.62 – ($98.62)(???) = $98.15 ---- OR ----- $98.62 - $98.15 = ($98.62)(???) ---- OR ---- ??? = ($98.62 - $98.15) / $98.62 ----- OR ---- ??? = $0.47 / $98.62 ---- OR ---- ??? = -0.477%

Remember, ALL of the economic projections for second quarter GDP were BASED on a first quarter drop of -5.5%. These predictions ranged from -1.2 to -1.5 in size.

Folks, here is the VERY important point. Our second quarter annualized GDP loss was (-0.477%)(4) = -1.9%

What’s this telling us? It’s telling us that the second quarter GDP result was far WORSE than analyst expectations! The only thing that made it SEEM better was the government manipulating the FIRST QUARTER number down by a significant degree. If the analysts had KNOWN that the first quarter would be revised to -6.4% then they would have had different expectations for second quarter GDP.

The government and media propagandists are out in FULL FORCE today – counting on the fact that our country does not understand their number manipulations.


TOPICS: Business/Economy; Chit/Chat
KEYWORDS: economics; economy; gdp; recession; revision
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To: politicket

Thanks. I knew it had been manipulated, but hadn’t time to figure it out yet.


21 posted on 07/31/2009 2:43:59 PM PDT by A.Hun (Common sense is no longer common.)
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To: politicket

Thanks for a great analysis. Don’t forget that all of the money for Fannie Mae/Freddie Mac, the auto industry, banks, and the stimulus are counted toward the GDP. This has the effect of artifically raising the GDP.


22 posted on 07/31/2009 3:00:19 PM PDT by DallasMike
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To: AFPhys; politicket; Petronski
It's now "official" : Recession Worse Than Prior Estimates, Revisions Show - BL, 2009 July 31, by Bob Willis Politically, it makes sense to revise down last year's numbers, including Q1 of this year, as it all will fall under "Bush's fault" and "inheritance" categories, as well as making any rebound (or deceleration in the rate of fall) of the economy look stronger for Obama and his "strong economic policies," which include stimulus and CARS etc. and for which he is already taking credit.
23 posted on 07/31/2009 4:02:30 PM PDT by CutePuppy (If you don't ask the right questions you may not get the right answers)
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To: CutePuppy
The revisions were in line with past experience in which initial figures tended to underestimate the severity of contractions during their early stages, he said.

On the one hand, this statement that "revisions were in line with past experience" says that this is an understood developement thus, conveniently, explaining how Obama/Biden/Dems were "off" in their projection of how fast the "stimulus" would work it's non-existent magic. On the other hand, this also means that the analysis of the economy by the Dems should have included this trend "to underestimate the severity of contractions during the early stages."

The Dems will get a large portion of their registered members to accept this "revisement" (and even that will soon lose some support) and blame Bush but the Independents (especially) and registered Pubbies (delusional but coming home) that gave a chance are not going back into the D column. They can clearly see by now that the stimulus was never created to stimulate the economy as a whole but the government sector to the detriment of the private.

The bottomline: If this particular revising of economic activity is so typical in recessionary times then the Dems were negligent in not factoring it in i.e. strong tax cuts aimed towards the job creaters, particuarly small businesses, to immediately jumpstart the economy.

24 posted on 07/31/2009 5:07:57 PM PDT by torchthemummy ("...end up eating a steady diet of government cheese...and living in a van down by the river!" M.F.)
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To: RobRoy

I just imagine how the same figures would be reported if John McCain were sitting in the oval office. This would be,”The worst depression in the history of the Earth”. Impeachment proceedings would have been already voted in the house and the senate would be holding farcical hearings prior to voting to remove him from office and they would be finding some way to put a democrat in to replace him rather than to let Sarah Palin succeed him.


25 posted on 07/31/2009 6:20:17 PM PDT by RipSawyer (Change has come to America and all hope is gone.)
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To: politicket

BUMP for great freeping.
Nice work.


26 posted on 07/31/2009 6:25:04 PM PDT by Lancey Howard
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To: Dream Warrior

Ain’t it amazin’ how they said the Bush tax cuts were destroyin’ the economy but usin’ tax dollars to buy people cars is a stimulus? I tell you if liberalism ain’t a mental disease it’ll damn shore do till the real thing comes along.

That would sound a lot better if Slim Pickens were around to say it.


27 posted on 07/31/2009 6:26:41 PM PDT by RipSawyer (Change has come to America and all hope is gone.)
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