Economy GDP revised down to negative 2.9% first quarter

[Attic]

1.) Inflation is not under-reported. It correlates well with independent estimates. This is a common complaint on conspiracy crank sites when their predictions of inflation have turned out to be false. Instead of finding out why their understanding of economics was wrong they pulled an 'unskewed polls' and decided that the numbers were a lie.

2.) Please provide evidence for the claimed manipulation and be as detailed as possible. This is a very serious allegation and should be investigated thoroughly.

What spending is being added back in?
What is the mechanism for adding it back in?
Who is making this manipulation?
How are they doing so without violating the public rules and methods for calculating this data?
At who's behest are they making these manipulations?

Etc, etc.

It's easy to claim the numbers are fudged, but when actually called on to show how this is the case it's interesting how quickly this falls apart.

1) Common sense. Inflation is under reported because prices are rising faster than what government claims.

Since 2000 Washington claims a 39% rise in consumer prices. They are under reporting inflation because consumer prices are rising well in excess of what they claim. Hedonics, substitution and weighting gimmicks help them under report inflation and this is significant because inflation is a stealth tax on consumers. The motive to under report it is clear, and it's under reported.

2) See same chart at end of Q2 and apply common sense.

 

[Engineer]

1) Common sense.

Since 2000 Washington claims a 39% rise in consumer prices. They are under reporting inflation because consumer prices are rising well in excess of what they claim. Hedonics, substitution and weighting gimmicks help them under report inflation and this is significant because inflation is a stealth tax on consumers. The motive to under report it is clear, and it's under reported.

2) See same chart at end of Q2 and apply common sense.

I have no clue whether that's right or not but I know that going to the grocery store (I have done the shopping for years), there is no chance that prices are going up at the rate that is being reported. I've never seen price hikes in 45 years like I've seen in the last 5 or so.

 

[fskimospy]

1) Common sense. Inflation is under reported because prices are rising faster than what government claims.

Since 2000 Washington claims a 39% rise in consumer prices. They are under reporting inflation because consumer prices are rising well in excess of what they claim. Hedonics, substitution and weighting gimmicks help them under report inflation and this is significant because inflation is a stealth tax on consumers. The motive to under report it is clear, and it's under reported.

2) See same chart at end of Q2 and apply common sense.

So basically your response is "because I said so".

Sorry, I take actual numbers, calculated transparently, correlated by independent estimates. If you can't back up your statements, just admit it.

 

[Bitek]

I think the markets are going up today because they went DOWN significantly yesterday on advance reports that the 1st-quarter adjustment would be really bad.

With one additional day to reflect on the numbers, the markets are now realizing they over-reacted yesterday.

Edit: And another possible "driver" is that is that investors are probably thinking that the bad 1st-quarter numbers may slow down the Fed's backing off on QE3.

Remember: Greed and fear. Greed and fear.

Could be. It's also the end of Q2, so institutions will be rebalancing funds, as well as having bargain hunters in there looking for deals after a big down day like yesterday.

Have to see what the trends are. Interesting so see where the market goes after the end of Q. Will be getting earnings as well as June employment in early July.
Not to mention it is the summer vacation season.
We'll see how Q3 goes.

 

[Attic]

I have no clue whether that's right or not but I know that going to the grocery store (I have done the shopping for years), there is no chance that prices are going up at the rate that is being reported. I've never seen price hikes in 45 years like I've seen in the last 5 or so.

Most folks I speak to feel the same way. But it's not a mystery why inflation is being under reported. An iPad that costs $600 last year and $600 this year, through the magic of government accounting can and does get deflationary %'s applied to it when applied to official inflationary numbers. There are many other gimmicks being used to bring inflation numbers below what the average person experiences.

But basically it comes down to idea that official inflation measures something other than what we think of as increases in the prices of our goods. Granted it measures that other idea accurately, but it applies lots of weightings/substitutions and hedonic adjustments to get there.

A ton of government expenditures are indexed to official inflation.

 

[Kwatt]

I think this is NOT correct. The figure is for the quarter, extrapolated to a yearly result. So the actual (2.9%) loss for the quarter would be something like:

17T*(1 - (0.971**.25))/4

I think I may catch a cold from the draft as all of this goes over my head.

I am not a real good math person. Could you break that down. Or point me to a place that I can learn the basics from?

I understand if you don't have the time to teach.

.

 

[fskimospy]

Most folks I speak to feel the same way. But it's not a mystery why inflation is being under reported. An iPad that costs $600 last year and $600 this year, through the magic of government accounting can and does get deflationary %'s applied to it when applied to official inflationary numbers. There are many other gimmicks being used to bring inflation numbers below what the average person experiences.

But basically it comes down to idea that official inflation measures something other than what we think of as increases in the prices of our goods. Granted it measures that other idea accurately, but it applies lots of weightings/substitutions and hedonic adjustments to get there.

A ton of government expenditures are indexed to official inflation.

Maybe you can explain why CPI and MIT's billion prices index track so closely then? Are they part of the conspiracy as well?

If you think inflation has been higher, how much higher? Give a number.

 

[fskimospy]

I think I may catch a cold from the draft as all of this goes over my head.

I am not a real good math person. Could you break that down. Or point me to a place that I can learn the basics from?

I understand if you don't have the time to teach.

.

Basically what the number means is that the economy shrank at a 2.9% annualized rate. Ie: if the economy shrank at the exact same rate for a full year, at the end it would be 2.9% smaller. While there are compounding effects, etc, it basically means that the economy shrank by 1/4th of what is listed.

 

[Attic]

So basically your response is "because I said so".

Sorry, I take actual numbers, calculated transparently, correlated by independent estimates. If you can't back up your statements, just admit it.

I'm taking actual numbers. You are taking substitutions and hedonic adjustments as well as weightings that don't line up with actual consumers habits.

You are saying the official measure is accurate, i'm just pointing out that what it's measuring is bullshit.

 

[fskimospy]

I'm taking actual numbers. You are taking substitutions and hedonic adjustments as well as weightings that don't line up with actual consumers habits.

You are saying the official measure is accurate, i'm just pointing out that what it's measuring is bullshit.

You're definitely not talking numbers. That's what I keep asking you to do. Use math. Use real economics. Stop reading crank sites like zerohedge.

The idea that we should treat an iPad that is twice as fast and twice as capable the same as the one before because they cost the same price requires us to live in a fantasyland. It makes no logical sense.

 

[Engineer]

Why a grim US economy is brightening ...

http://finance.yahoo.com/news/why-grim-us-economic-picture-brightening-172426270--finance.html

 

[Zebo]

I have no clue whether that's right or not but I know that going to the grocery store (I have done the shopping for years), there is no chance that prices are going up at the rate that is being reported. I've never seen price hikes in 45 years like I've seen in the last 5 or so.

Because govt is FOS. They changes indices, under report, and methodology for poltics and so you can't compare to "good ole days" how bad we are doing today.

That why I like this site.
http://www.shadowstats.com/alternate_data/inflation-charts

Explains new methodologies, and compares them with 1990s 1980s 1970s methodologies.

Have fun.

 

[Attic]

Basically what the number means is that the economy shrank at a 2.9% annualized rate. Ie: if the economy shrank at the exact same rate for a full year, at the end it would be 2.9% smaller. While there are compounding effects, etc, it basically means that the economy shrank by 1/4th of what is listed.

http://bpp.mit.edu/usa/

Looks like CPI is under reported.

Beyond that we don't need a huge massive number of items to figure out inflation. Obviously the billion dollar price index measures to much.

We need a measure of home/energy/food/healthcare, basically something that makes up the signficiant portion of an average consumers expenses and weights that approriatly for the inflation they are experiencing, not something that measures a "billion" prices and averages the increases inadequatly for home/energy/food/healthcare.

Edit: When government issues cost of living adjustments for folks who need that money, that money goes to essentials. Not to gimmickly wieghted and priced iPads/TV's and other stuff that is being used to bring down official inflation numbers.

 

[Kwatt]

Basically what the number means is that the economy shrank at a 2.9% annualized rate. Ie: if the economy shrank at the exact same rate for a full year, at the end it would be 2.9% smaller. While there are compounding effects, etc, it basically means that the economy shrank by 1/4th of what is listed.

Got It. A low math explaination.

.

 

[fskimospy]

http://bpp.mit.edu/usa/

Looks like CPI is under reported.

Actually it looks like the two rates are quite close to one another. If your argument is that prices are actually ~2% higher over the last 6 yearsthan CPI says they are... uhmm... okay.

Beyond that we don't need a huge massive number of items to figure out inflation. Obviously the billion dollar price index measures to much.

We need a measure of home/energy/food/healthcare, basically something that makes up the signficiant portion of an average consumers expenses and weights that approriatly for the inflation they are experiencing, not something that measures a "billion" prices and averages the increases inadequatly for home/energy/food/healthcare.

Interesting, now the BPP measures too much of the US economy to be a reliable measure of inflation. Before it was CPI measured too little. This seems an awful lot like attempts to find a way not to believe the data that's staring you in the face.

If you want a measure of home/energy/food/etc, you'll be lucky to know that there's a thing known as headline CPI.

Edit: When government issues cost of living adjustments for folks who need that money, that money goes to essentials. Not to gimmickly wieghted and priced iPads/TV's and other stuff that is being used to bring down official inflation numbers.

Used by who? Who is behind this manipulation? Are you saying that the BLS is acting under government orders to reduce inflation rates? Who issued these orders? How do you square this with the fact that the BLS uses methods that adhere to international standards, etc? Are you saying the whole world is in on the conspiracy?

 

[fskimospy]

Because govt is FOS. They changes indices, under report, and methodology for poltics and so you can't compare to "good ole days" how bad we are doing today.

That why I like this site.
http://www.shadowstats.com/alternate_data/inflation-charts

Explains new methodologies, and compares them with 1990s 1980s 1970s methodologies.

Have fun.

Shadowstats is the 'unskewed polls' of economics sites. Reading it actually makes you dumber.

Just look at their numbers and realize the insane implications of them.

If you believe shadowstats, it seems that US inflation has averaged about 6% since 2002. That would mean that compounded over time the average price you pay for your housing, goods, etc, has increased by 90% since 2002.

Does any rational person actually believe that?

 

[nehalem256]

Actually it looks like the two rates are quite close to one another. If your argument is that prices are actually ~2% higher over the last 6 yearsthan CPI says they are... uhmm... okay.

That seems like a rather dishonest way of comparing it. Going up 10% instead of 8% means a measurement error of 25%.

But hey whats 25% between friends?

 

[Knowing]

How can there be any confusion?

Where did that money go?

Oh, there it is.

I wonder what it's doing?

Looks like not much of anything, why?

Fed paying banks billions on reserves

The inflation hasn't hit the real economy because the government dumped money in to the banks and is paying them interest on it. This also explains why the 1% (more accurately, the .001%) are doing so well - they have a golden goose.

 

[fskimospy]

That seems like a rather dishonest way of comparing it. Going up 10% instead of 8% means a measurement error of 25%.

But hey whats 25% between friends?

No, it's the correct way to say it.

People are saying that they know inflation is higher than CPI because of their personal experiences. If they can notice a 2% difference over 6 years that's some truly amazing actuarial ability.

 

[Daverino]

That seems like a rather dishonest way of comparing it. Going up 10% instead of 8% means a measurement error of 25%.

But hey whats 25% between friends?

HOLY FUCK NO.

You're trying to calculate a percentage error of a percentage? Ratios do not work that way. By your mathologicification, an estimate of .0001% compared to an actual of .1% is a thousand-fold error while an estimate of 50% is only a mere doubling error if the actual is 100%.

Ratios and percentages are not real numbers (mathematical definition) and cannot be treated the same way. For example, the mean of two real numbers is A + B / 2. The mean of two ratios would be 2 / (1/A) + (1/B). . .

 

[fskimospy]

HOLY FUCK NO.

You're trying to calculate a percentage error of a percentage? Ratios do not work that way. By your mathologicification, an estimate of .0001% compared to an actual of .1% is a thousand-fold error while an estimate of 50% is only a mere doubling error if the actual is 100%.

Ratios and percentages are not real numbers (mathematical definition) and cannot be treated the same way. For example, the mean of two real numbers is A + B / 2. The mean of two ratios would be 2 / (1/A) + (1/B). . .

Basic math is not nehalem's strong suit.

 

[nehalem256]

Basic math is not nehalem's strong suit.

10% is 25% more than 8%.

Its pretty simple.

Somehow I doubt you would put up with your mortgage company "accidently" charging you 5% interest instead of 4% interest... but hey its only 1%!!!!!!

 

[Genx87]

I have no clue whether that's right or not but I know that going to the grocery store (I have done the shopping for years), there is no chance that prices are going up at the rate that is being reported. I've never seen price hikes in 45 years like I've seen in the last 5 or so.

I agree with you on this. Food prices have become noticeably more expensive in the last few years. Looking at CPI data for Urban consumers from May 2013-14. Meat is up 7.7%, Dairy 4.2. The govt claims 2.5% for their basket. It feels worse to me. /shrug

Be interesting to see how it looks for this month and as we go forward. Curious to see how the California drought sends it ripple through the system.

 

[fskimospy]

10% is 25% more than 8%.

Its pretty simple.

Somehow I doubt you would put up with your mortgage company "accidently" charging you 5% interest instead of 4% interest... but hey its only 1%!!!!!!

Yet under your way of looking at things you would view interest going from .0001% to .0002% to be a bigger change than going from 4% to 5%.

This is because you're stupid and don't understand math.

 

[nehalem256]

Yet under your way of looking at things you would view interest going from .0001% to .0002% to be a bigger change than going from 4% to 5%.

This is because you're stupid and don't understand math.

In one case your interest rate went up 100%, and in the other case it went up 25%.

100% is more than 25%.