The Great American Job Sellout

google groups ^ | feb 2005 | Paul Craig Roberts

[Toddsterpatriot]

Please note that I said "real GDP" has been declining not 'reported GDP'

I looked thru that entire "article" and don't see one comment on GDP. So, where is the difference between real and reported GDP?

[tm22721]

So, where is the difference between real and reported GDP?

Subtract 4% (real inflation) and you get negative GDP for the past several years.

BUMP

[tm22721]

I looked thru that entire "article" and don't see one comment on GDP

Sorry here's the pertinent article.

http://www.kitcocasey.com/displayArticle.php?id=23

BUMP

[Havoc]

One big package, sir, It subjugates the SCOTUS to it's own jurisdiction from which there is no appeal on decision - thusly overriding the Scotus. It has been ammended a place in constitutional law without proper ammending and is a violation of the oath of office of everyone that voted for it, and helps contribute to the package deal. Treason. Amazing how everyone always wants to define down trechery - especially when they're eyeballs deep in it.

[1rudeboy]

Please note that I said "real GDP" has been declining not 'reported GDP.'

I noted that the first time. And I'm noting that your comment is BS.

[1rudeboy]

So if you subract inflation from real GDP, does that make it super-real GDP?

[tm22721]

Please read the article before declaring it BS.

http://www.kitcocasey.com/displayArticle.php?id=23

BUMP

[1rudeboy]

Even if your article is taken at face value, it does not show GDP dropping in the way you suggested. Nice try, though.

[Toddsterpatriot]

Subtract 4% (real inflation) and you get negative GDP for the past several years.

And your source for the 4% underestimation of inflation is this guy? Let's look further.

We intuitively know the government "cooks the books" when we see them using a deflation rate of 1.3% to calculate Q3 GDP for 2004 at 4%. 1.3% seems like a significant under-estimate, given that prices in sectors such as housing are up 12%.

Since I suspect the government has designs on making the economy look better than it is by using low inflation numbers, I decided to create my own inflation indicator, an average of three common indexes: CPI U, PPI All Commodities, and the Housing price from OFEHO. This covers the main things we spend money on – housing, commodity-based goods like gasoline, and other consumer goods.

OK, he includes housing prices in his average because it covers the main things we spend money on. Great. I bought my house 12 years ago. How does a 12% increase in the last year hurt me? How does the fact that my house more than doubled in value in the last 12 years hurt me?

I guess he would be correct if everyone bought a new house every year. Since we don't, he's not. Nice try though.

Mr. Conrad holds a Bachelor of Engineering degree from Yale and an MBA from Harvard.

Maybe the real inflation is the grade inflation that allowed this guy to get into and graduate from Harvard.

[1rudeboy]

Let me be more specific: the trend line on this graph still shows growth over time. Specifically, the only times it shows negative GDP growth are during recessionary periods, and "mysteriously and conveniently" for benefit of this gentleman's argument. So what qualifies as "declining for some time" in your book? A year? Two?

[Toddsterpatriot]

A slower economy is also consistent with longer-term interest rates staying low

Low inflation is more consistent with longer-term interest rates staying low. See stagflation, low growth but high long term rates. Hmmmm, and I didn't even go to Harvard!!!

[1rudeboy]

There's a reason energy prices are excluded from conventional inflation calculations. Mr. Conrad ignores this reason (and why shouldn't he, since energy prices are significantly up), adds-in housing costs (also up), and voila! a decline in real GDP. Fair enough . . . although I remain mystified about him using "his" falling GDP numbers to discuss "weak" employment figures. Apparently, GDP is not the only area where he feels the need to be a pessimist.

[Toddsterpatriot]

There's a reason energy prices are excluded from conventional inflation calculations.

Energy is excluded from "core" inflation. It is included in the deflator number used to calculate real GDP.

[1rudeboy]

If that's the case, then why does Mr. Conrad state, "I decided to create my own inflation indicator, an average of three common indexes: CPI U, PPI All Commodities, and the Housing price from OFEHO. This covers the main things we spend money on – housing, commodity-based goods like gasoline, and other consumer goods." [emphasis added]

Is he double-counting? I honestly don't know.

[Toddsterpatriot]

Is he double-counting? I honestly don't know.

If each of his indexes contained the same info, the average would be correct. The problem is using housing prices. I fought over this with that goof Paul Ross. If housing prices increased by 12% but only 1% of the population bought a house then 1% x 12% = 0.12% increase in the basket of consumer goods used to calculate CPI. More people buy gasoline, so an increase hits a larger % of the population, but the total spent per year is much smaller compared to a house purchase.

CPI-U is supposed to be based on what a "typical" urban dweller consumes in a year. That's where Paul Ross was wrong. He had a source that showed people buy a new house every 12 years. I "estimated" that that meant only 8% buy a house in a given year. So, 92% who don't buy are typical, 8% who do are atypical. Conrad treats the housing increase as hitting 100% of the population. Just a small error on his part. LOL!!