Economy GDP revised down to negative 2.9% first quarter

[fskimospy]

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

100% is more than 25%.

Sweet, I'll take the one where my interest went up 100%. Enjoy your new rate, math genius.

 

[Daverino]

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%!!!!!!

10 is 25% more than 8

10% is 25% more than 8% is meaningless.

A percentage is the division of two numbers normalized to a fraction of 100. It is bounded by zero and 1. You cannot treat a percentage as a real number mathematically speaking.

 

[realibrad]

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.

To be fair, it would be a bigger "change". The first is a 100% increase, relative to the initial value, where as the 2nd is a 25% increase relative to the initial value.

50% of .0001 is a smaller value than 20% of 4, but if the measurement is change, then the first one is "bigger" in a percentage.

 

[nehalem256]

Sweet, I'll take the one where my interest went up 100%. Enjoy your new rate, math genius.

So would I. But that is not because of the increase, but because of the massive relative difference in the initial interest rate.

Doubling a small very number is still less than increasing a large number by 25%.

 

[fskimospy]

To be fair, it would be a bigger "change". The first is a 50% increase, relative to the initial value, where as the 2nd is a 20% increase relative to the initial value.

50% of .0001 is a smaller value than 20% of 4, but if the measurement is change, then the first one is "bigger" in a percentage.

It would be a larger relative change, but a much smaller absolute change.

Regardless, when we're talking about people's perception of rising prices as was the original topic, the idea that they are noticing a cumulative 2% difference in total price over six years is silliness. Additionally, if CPI were being understated as they imply the differences would be much larger.

 

[Black Octagon]

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

100% is more than 25%.

Bahahaha! Dude, u is wrong mmmkay? Even iknowz that and lookame. Cant even rite in propa engrish

 

[realibrad]

It would be a larger relative change, but a much smaller absolute change.

Regardless, when we're talking about people's perception of rising prices as was the original topic, the idea that they are noticing a cumulative 2% difference in total price over six years is silliness. Additionally, if CPI were being understated as they imply the differences would be much larger.

Oh I agree with that. But I knew his argument would be the relative change vs the absolute. He originally made an error on how he looked at the data.

Also, I dont think people are looking at the compounded effects. If I'm not mistaken, the CBO measures inflation monthly, and so if it increases 1% every month, its compounded over 12 months. That would give a much larger net effect relative to the initial price right?

 

[piasabird]

Maybe spending increased but did people get less or more with that spending? Insurance is a lot of that spending.

 

[Bitek]

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.

.

He's pointing out that the 2.9% figure is "annualized", meaning that it's a per year figure, but based on 3 mos of data. So from my simplified example, to get quarterly change you need to divide by 4.

Made up numbers follow. If GDP is 16T per year, avg is 4T per Q. A 3% decline would be $4T*0.97. 3% gain would be 4*1.03. That's a swing of $120B. ($4T*0.03)

So the economists take some time to gather these measurements. Can't measure everything, so they are taking samples and correcting for error and noise.

Obviously the real calcs are much more complicated

 

[Daverino]

Best part of it all is that I'm making a killing in the markets today. . .

 

[fskimospy]

Oh I agree with that. But I knew his argument would be the relative change vs the absolute. He originally made an error on how he looked at the data.

Also, I dont think people are looking at the compounded effects. If I'm not mistaken, the CBO measures inflation monthly, and so if it increases 1% every month, its compounded over 12 months. That would give a much larger net effect relative to the initial price right?

The CBO measures it in a whole bunch of different ways, including both the actual change and the annualized rate of change. It all depends on who is reporting and what they are talking about.

 

[Jaskalas]

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.

Agreed, and that's why the market is responding positively. I believe that money is inflating its value, above and beyond the fundamentals.

 

[Kwatt]

He's pointing out that the 2.9% figure is "annualized", meaning that it's a per year figure, but based on 3 mos of data. So from my simplified example, to get quarterly change you need to divide by 4.

Made up numbers follow. If GDP is 16T per year, avg is 4T per Q. A 3% decline would be $4T*0.97. 3% gain would be 4*1.03. That's a swing of $120B. ($4T*0.03)

So the economists take some time to gather these measurements. Can't measure everything, so they are taking samples and correcting for error and noise.

Obviously the real calcs are much more complicated

I see. Thank You.

Org. full year est. for 2014 was 2% annual. So, with a -2.9% annual for the first quarter.

What do the next 3 quarters have to come in at to get there?

.

 

[chowderhead]

I'm not fan of Obamacare, but I dont think the effects have been large enough to be measurable yet.

http://blogs.wsj.com/economics/2014...-9-q1-gdp-revision-different-shades-of-nasty/

The initial estimate of healthcare spending’s contribution to Q1 growth went from an initial estimate of +1.10 percentage points (representing a 9.9% quarter-to-quarter annualized growth rate in the sector) to -0.16pp (-1.4% q/q annualized).

Healthcare spending went DOWN 1.4% instead of going up 9.9% quarter to quarter which was a major driver in the revision of the GDP downwards. Thanks a lot Obama ... wait what?

 

[Bitek]

I see. Thank You.

Org. full year est. for 2014 was 2% annual. So, with a -2.9% annual for the first quarter.

What do the next 3 quarters have to come in at to get there?

.

Sorry if I was repeating an answer, the reply sat forever before I posted it.

2= (-2.9+3x)\4
8=-2.9+3x
10.9=3x
X=3.6

 

[Kwatt]

Sorry if I was repeating an answer, the reply sat forever before I posted it.

2= (-2.9+3x)\4
8=-2.9+3x
10.9=3x
X=3.6

Thanks for the answer and the formula!

3.6 annual rate for the next 3 quarters sounds high to me.

Although one of the talking heads on TV said he expects a annual of 3 for the year.

.

 

[Bitek]

Thanks for the answer and the formula!

3.6 annual rate for the next 3 quarters sounds high to me.

Although one of the talking heads on TV said he expects a annual of 3 for the year.

.

Actually I think I might have messed that up... Lemme double check...

Edit: n/m, just going crazy and need to get dinner going

 

[Engineer]

Maybe spending increased but did people get less or more with that spending? Insurance is a lot of that spending.

Does anyone know if the 'spending increase' is after inflation or before? A 1% increase year over year before inflation is a negative in reality (but I'm not sure what it's listed as)?!?

 

[Victorian Gray]

Quote: Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased at a 1.0 percent rate. It was previously reported to have advanced at a 3.1 percent pace.

How is consumer spending increasing driving down the economy?

Ok, this one really was funny. :thumbsup:

 

[chowderhead]

US GDP grew at 4% in the 2nd Quarter.
http://www.forbes.com/sites/samanthasharf/2014/07/30/u-s-gdp-grew-4-in-the-second-quarter-2014/

It does seem like the last quarter was a fluke due to bad weather.