Which GDP is Right? The Official or the Alternative?
|January 30, 2014||Posted by Staff under Politics|
These two 2014 excerpts on US GDP are from Jan 30 by the BEA and by Shadow Stats.
Gross Domestic Product, 4th quarter and annual 2013 (advance estimate)
The U.S. Bureau of Economic Analysis (BEA) says real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 3.2 percent in the fourth quarter of 2013 (that is, from the third quarter to the fourth quarter). In the third quarter, real GDP increased 4.1 percent.
Alternate Gross Domestic Product Chart
The SGS-Alternate GDP reflects the inflation-adjusted, or real, year-to-year GDP change, adjusted for distortions in government inflation usage and methodological changes that have resulted in a built-in upside bias to official reporting.
The official GDP headline number refers to the most-recent quarter’s annualized quarter-to-quarter rate of change (what that quarter’s percent quarter-to-quarter change would translate into if compounded for four consecutive quarters).
This can mean that the latest quarter can be reported with a positive annualized growth rate, while the actual annual rate of change is negative.
Ed. Notes: Their accompanying chart is an eye-opener. It seems official stats do not reflect reality so much as they do reflect the interests of officials. Which makes it hard to do the accounting that is a central part of economics. It’s another reason why economics is not a science. But no other discipline deals with controversies such as property and confronts the ruling elite directly, so it’s easy to see why economists wilt under the pressure. Oscar Wilde said number crunchers know the price of everything and the value of nothing. Maybe so, but they also know which side of the bread is buttered. It’s why they turn a blind eye to researchers such as Shadow Stats.