On Topic : GDP

[(former)FormerSanDiegan]

peterb – I believe the government understates inflation. However, I find it equally hard to believe the shadowstats GDP estimates that cumulative GDP growth has essentially been 0% from 1986 to 2008.

[gandalf]

FSD (and others), given your understanding of GDP calculations, what would speculation in commodities do to GDP numbers? In particular, what would the recent run-up in oil prices (part speculative / part other factors) do to overall GDP calculations? It would show up as growth, correct? Not ‘real’ growth in terms of increased industrial output, but growth as measured by dollar value transactions, correct? Are components such as oil and related industries corrected for price fluctuations?

Also, I believe it is typical for defense spending to increase just prior to national elections, restocking of supplies and awarding of contracts. I seem to remember from back in the Wall Street days these are somewhat timed to produce a bump for the quarter, with the result generally being about a percentage point GDP for the quarter impacted.

Any thoughts, insights, feedback?

[gandalf]

FSD (and others), given your understanding of GDP calculations, what would speculation in commodities do to GDP numbers? In particular, what would the recent run-up in oil prices (part speculative / part other factors) do to overall GDP calculations? It would show up as growth, correct? Not ‘real’ growth in terms of increased industrial output, but growth as measured by dollar value transactions, correct? Are components such as oil and related industries corrected for price fluctuations?

Also, I believe it is typical for defense spending to increase just prior to national elections, restocking of supplies and awarding of contracts. I seem to remember from back in the Wall Street days these are somewhat timed to produce a bump for the quarter, with the result generally being about a percentage point GDP for the quarter impacted.

Any thoughts, insights, feedback?

[gandalf]

FSD (and others), given your understanding of GDP calculations, what would speculation in commodities do to GDP numbers? In particular, what would the recent run-up in oil prices (part speculative / part other factors) do to overall GDP calculations? It would show up as growth, correct? Not ‘real’ growth in terms of increased industrial output, but growth as measured by dollar value transactions, correct? Are components such as oil and related industries corrected for price fluctuations?

Also, I believe it is typical for defense spending to increase just prior to national elections, restocking of supplies and awarding of contracts. I seem to remember from back in the Wall Street days these are somewhat timed to produce a bump for the quarter, with the result generally being about a percentage point GDP for the quarter impacted.

Any thoughts, insights, feedback?

[gandalf]

FSD (and others), given your understanding of GDP calculations, what would speculation in commodities do to GDP numbers? In particular, what would the recent run-up in oil prices (part speculative / part other factors) do to overall GDP calculations? It would show up as growth, correct? Not ‘real’ growth in terms of increased industrial output, but growth as measured by dollar value transactions, correct? Are components such as oil and related industries corrected for price fluctuations?

Also, I believe it is typical for defense spending to increase just prior to national elections, restocking of supplies and awarding of contracts. I seem to remember from back in the Wall Street days these are somewhat timed to produce a bump for the quarter, with the result generally being about a percentage point GDP for the quarter impacted.

Any thoughts, insights, feedback?

[gandalf]

FSD (and others), given your understanding of GDP calculations, what would speculation in commodities do to GDP numbers? In particular, what would the recent run-up in oil prices (part speculative / part other factors) do to overall GDP calculations? It would show up as growth, correct? Not ‘real’ growth in terms of increased industrial output, but growth as measured by dollar value transactions, correct? Are components such as oil and related industries corrected for price fluctuations?

Also, I believe it is typical for defense spending to increase just prior to national elections, restocking of supplies and awarding of contracts. I seem to remember from back in the Wall Street days these are somewhat timed to produce a bump for the quarter, with the result generally being about a percentage point GDP for the quarter impacted.

Any thoughts, insights, feedback?

[(former)FormerSanDiegan]

I’m no expert, but … Regarding commodity prices : The GDP often quoted is real GDP, accounting for inflation. So when GDP is reported to be 1% it is growth above inflation estimates. I suppose commodity prices can influence GDP by industries that produce or mine commodities having a larger output. However, raw material production is a relatively small part of our service-oriented economy. Even manufacturing is smaller than the service economy. So, soaring commodity prices most likely reduce real GDP growth in the US.

Current defense spending is based on the budget passed for FY08 which started in October 2007. I believe that there is a seasonal increase in defense spending in the july-September quarter due to fiscal year end targets. This is independent of the election cycle. Any election cycle dependency would have to have been put in place last September. In either case that would impact the current quarter more so than the 2nd quarter which was just reported.

[(former)FormerSanDiegan]

I’m no expert, but … Regarding commodity prices : The GDP often quoted is real GDP, accounting for inflation. So when GDP is reported to be 1% it is growth above inflation estimates. I suppose commodity prices can influence GDP by industries that produce or mine commodities having a larger output. However, raw material production is a relatively small part of our service-oriented economy. Even manufacturing is smaller than the service economy. So, soaring commodity prices most likely reduce real GDP growth in the US.

Current defense spending is based on the budget passed for FY08 which started in October 2007. I believe that there is a seasonal increase in defense spending in the july-September quarter due to fiscal year end targets. This is independent of the election cycle. Any election cycle dependency would have to have been put in place last September. In either case that would impact the current quarter more so than the 2nd quarter which was just reported.

[(former)FormerSanDiegan]

I’m no expert, but … Regarding commodity prices : The GDP often quoted is real GDP, accounting for inflation. So when GDP is reported to be 1% it is growth above inflation estimates. I suppose commodity prices can influence GDP by industries that produce or mine commodities having a larger output. However, raw material production is a relatively small part of our service-oriented economy. Even manufacturing is smaller than the service economy. So, soaring commodity prices most likely reduce real GDP growth in the US.

Current defense spending is based on the budget passed for FY08 which started in October 2007. I believe that there is a seasonal increase in defense spending in the july-September quarter due to fiscal year end targets. This is independent of the election cycle. Any election cycle dependency would have to have been put in place last September. In either case that would impact the current quarter more so than the 2nd quarter which was just reported.

[(former)FormerSanDiegan]

I’m no expert, but … Regarding commodity prices : The GDP often quoted is real GDP, accounting for inflation. So when GDP is reported to be 1% it is growth above inflation estimates. I suppose commodity prices can influence GDP by industries that produce or mine commodities having a larger output. However, raw material production is a relatively small part of our service-oriented economy. Even manufacturing is smaller than the service economy. So, soaring commodity prices most likely reduce real GDP growth in the US.

Current defense spending is based on the budget passed for FY08 which started in October 2007. I believe that there is a seasonal increase in defense spending in the july-September quarter due to fiscal year end targets. This is independent of the election cycle. Any election cycle dependency would have to have been put in place last September. In either case that would impact the current quarter more so than the 2nd quarter which was just reported.

[(former)FormerSanDiegan]

I’m no expert, but … Regarding commodity prices : The GDP often quoted is real GDP, accounting for inflation. So when GDP is reported to be 1% it is growth above inflation estimates. I suppose commodity prices can influence GDP by industries that produce or mine commodities having a larger output. However, raw material production is a relatively small part of our service-oriented economy. Even manufacturing is smaller than the service economy. So, soaring commodity prices most likely reduce real GDP growth in the US.

Current defense spending is based on the budget passed for FY08 which started in October 2007. I believe that there is a seasonal increase in defense spending in the july-September quarter due to fiscal year end targets. This is independent of the election cycle. Any election cycle dependency would have to have been put in place last September. In either case that would impact the current quarter more so than the 2nd quarter which was just reported.

[bsrsharma]

Based on the complexity of measuring GDP and the frequent large swings due to corrections applied later on, I think a small figure in the +/-1% range has too much uncertainty to make sense as an accurate measure (see how +0.7% swung to -0.2%). If there is a high (and uneven) inflation regime as we are in now (large inflation in food & energy, none in labor, deflation in house prices), I think the figures are even more unreliable. Ideally, BEA should bound the figures with margins of error and say GDP increased by +1.9% +/- 1%. (That way we know it was somewhere between 0.9% to 2.9%)

[bsrsharma]

Based on the complexity of measuring GDP and the frequent large swings due to corrections applied later on, I think a small figure in the +/-1% range has too much uncertainty to make sense as an accurate measure (see how +0.7% swung to -0.2%). If there is a high (and uneven) inflation regime as we are in now (large inflation in food & energy, none in labor, deflation in house prices), I think the figures are even more unreliable. Ideally, BEA should bound the figures with margins of error and say GDP increased by +1.9% +/- 1%. (That way we know it was somewhere between 0.9% to 2.9%)

[bsrsharma]

Based on the complexity of measuring GDP and the frequent large swings due to corrections applied later on, I think a small figure in the +/-1% range has too much uncertainty to make sense as an accurate measure (see how +0.7% swung to -0.2%). If there is a high (and uneven) inflation regime as we are in now (large inflation in food & energy, none in labor, deflation in house prices), I think the figures are even more unreliable. Ideally, BEA should bound the figures with margins of error and say GDP increased by +1.9% +/- 1%. (That way we know it was somewhere between 0.9% to 2.9%)

[bsrsharma]

Based on the complexity of measuring GDP and the frequent large swings due to corrections applied later on, I think a small figure in the +/-1% range has too much uncertainty to make sense as an accurate measure (see how +0.7% swung to -0.2%). If there is a high (and uneven) inflation regime as we are in now (large inflation in food & energy, none in labor, deflation in house prices), I think the figures are even more unreliable. Ideally, BEA should bound the figures with margins of error and say GDP increased by +1.9% +/- 1%. (That way we know it was somewhere between 0.9% to 2.9%)

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