The US economy and the real GDP.

Discussion in 'Economics' started by SouthAmerica, Apr 30, 2008.

  1. .
    April 30, 2008

    SouthAmerica: I was watching CNBC around 8:30 AM when the US Government released the GDP figures for the 1st Q 2008.

    I found interesting all the discussions on that television show about such meaningless information.

    A few days ago I was talking with a friend of mine that has traveled all over the world and have seen the economy of most countries first hand and he also has a solid knowledge of economics. We were talking about the latest book by Kevin Phillips and also about his article on Harper’s magazine and we both agree that most of the information published by the US government has become completely meaningless including the GDP figures. Today April 30, 2008 the US government has just released the latest GDP figures and the US Government claims that the current-dollar GDP = US$14.2 trillion.

    My friend and I believe that after you adjust this fairy tale figure the real GDP of the US economy might be on the range of US$ 9 to US$ 10 trillion – the difference between these figures are all the meanings adjustments that they make to inflate the GDP figures calculated by the US Government to show a better performance and a larger economy than the reality.


    “Economy grows by only 0.6 percent in 1st quarter of 2008”
    By JEANNINE AVERSA, AP Economics Writer
    The Associated Press – April 30, 2008

    WASHINGTON - The bruised economy limped through the first quarter of this year at only 0.6 percent as housing and credit problems forced people and businesses alike to hunker down.

    The country's economic growth during January through March was the same as in the final three months of last year, the Commerce Department reported Wednesday. The statistic did not meet what economists consider the classic definition of a recession, which is a retraction of the economy. This means that although the economy is stuck in a rut, it is still managing to grow, even if modestly.

    Many analysts were predicting that the gross domestic product (GDP) would weaken a bit more — to a pace of just 0.5 percent — in the first quarter.

    Earlier this year, some economists thought the economy would actually lurch into reverse during the opening quarter. Now, they say they believe that will likely happen during the current April-to-June period.

    Gross domestic product measures the value of all goods and services produced within the United States and is the best measure of the country's economic health. Voters are keenly worried about the country's economic problems and so are politicians — in Congress, in the White House and on the campaign trail.

    The housing situation turned more bleak in the first quarter, as record-high foreclosures dumped more unsold homes on the market, adding to builders' headaches. Builders slashed spending on housing projects by a whopping 26.7 percent, on an annualized basis, the most in 27 years.

    That was the big drag on the economy.
    Consumers — whose spending is vital to the country's economic health — turned much more cautious, also restraining overall economic growth in the first quarter. Their spending rose at just a 1 percent pace. That was down from a 2.3 percent growth rate and was the slowest since the second quarter of 2001, when the United States was suffering through its last recession.

    Soaring energy and food prices are walloping people's pocketbooks, leaving them with less to spend on other things. The credit crunch also has made it harder for people to finance big ticket items, such as cars and homes.

    And, many homeowners — watching their homes — often their single-biggest asset — slump in value, also are feeling less wealthy and less inclined to spend….


  2. Funny, that would apply to many to most Brazilians. I have a good friend from Brazil. He had to come HERE to find a real job and serious money.
  3. GTS


    Did you pull the 9-10 trillion figure out of the air? If not then mathematically show how you arrived at those numbers. Otherwise you are just replacing one fairytale with another.
  4. spidey


    I believe on Glenn Beck (CNN?) last night there was a guy showing how the govt. has changed the way they report inflation. Using the 1982 method real inflation is 11.5% A far cry from the 4% they tell us now. Govt. #'s are all horseshit.
  5. The money-pump figures support this. But when you mention it to people, most go "BULLSHIT... Gummint says is only 2-3%" DUH!!
  6. [​IMG]

    Underreport inflation and it overstates GDP.

    50lb bag of flour was about $11 a year ago now going for $30. Eggs up 20%+ yoy. The magic of hedonics and substitution.
  7. +1

    Excellent post. Should be made a sticky in the economics forum.
  8. excellent post!!
    that chart should be plastered all over the internet!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! wake up people the emperor wears no clothes
  9. .

    “Brazil president finds 'risk free' US economy laughable”
    The Associated Press
    Published: May 10, 2008

    BRASILIA, Brazil: President Luiz Inacio Lula da Silva marveled at America's "zero risk" financial rating on Friday, raising some laughs as he wondered how ratings agencies could call the troubled U.S. economy perfectly safe.

    "I'm amazed to see that the American risk is zero. It's in a miserable crisis, and there's no risk," Silva said, drawing chuckles from a crowd at the inauguration of a gas pipeline in Espirito Santo state.

    "Brazil's risk, Russia's risk increase, but the Americans, who are in debt up to here, have zero risk," Silva said. "It's an invention of the ratings agencies, that's what I think."

    Last month, Standard & Poor's Ratings Services raised Brazil's debt rating to investment grade, a benchmark long awaited by Latin America's largest country. The country's decades-old debt crisis is over, and Brazil has emerged as a net foreign creditor.

    "Brazil is living a magic moment," Silva said. "With this long-term growth, we are building the solid bases of a highly industrialized country."

    He added: "The American crisis hasn't come here yet."

    Brazil is riding an economic boom, with annual growth of about 5 percent and high overseas demand for key exports such as beef, steel and soy.
  10. Does it really? I don't feel like looking up the calc right now but I would think we measure GDP in today's dollars. Is it maybe real GDP growth that gets messed up and total GDP is unaffected?
    #10     May 10, 2008