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Three reasons the GDP was up this quarter: 1) Gov't loaned us our own money in the form of stimulus checks. 2) Prices increased (inflation, but not as how the

Three reasons the GDP was up this quarter: 1) Gov't loaned us our own money in the form of stimulus checks. 2) Prices increased (inflation, but not as how the gov't reported it) 3) More importantly (and related to 2) is the way they collect their data. They add in something called "hedonic regression." That means if a TV costs the same than it does 3 years ago, it's still more valuable because it has 1080p, and that gets added into GDP, and somehow mystically subtracted from CPI. There's plenty of other reasons why his claim is bullshit, but just a couple more notes: Recessions are not defined as two quarters of negative GDP. Rather, it's a period of economic contraction. We are in a recession. Anyone who denies that is not looking at the same data as I am. Look at employment, housing starts, credit spreads, equity markets, bond markets, credit default swap markets, CPI (both core and otherwise), and number of bank failures. Some better resources: http://bigpicture.typepad.com/ http://bigpicture.typepad.com/ http://calculatedrisk.blogspot.com/ http://calculatedrisk.blogspot.com/

DanielBMarkham 18y ago
"Recessions are not defined as two quarters of negative GDP. Rather, it's a period of economic contraction." I've begun to hear this over the last year or so. While I understand the sentiment, unless you have a commonly defined measuring stick for "economic contraction", I think it's a generalization without a point. Just by googling around, it seems pretty clear that the rule-of-thumb is a negative change in GDP over two consecutive quarters. Now you can argue that GDP changes aren't reflective of the change in the economy, but if you do that, then you're stuck with coming up with a new definition. Not only that, but you would have to retrospectively go back and apply your new definition to historical financial data. Then you'd have to make an argument that the new definition matches up with the actual perception. I'm still on the fence about this. I think I'll wait until after the election heat cools off to read up some more. I hear you about the indicators you mention, but there are a lot of ways to slice a cake, and growth is growth.
- DanielBMarkham 18y ago
  This moderation system sucks. There was _nothing_ in the parent comment that made it any better or worse than any other comment. It was on-topic; it expanded the conversation; it didn't really make some big attack. It was just an honest observation. Go ahead -- down mod me for this one too. But when you downmod, you should be required to explain yourself.
- steveplace 18y ago
  Don't know why you got downmodded... Economists are generally lagging indicators when it comes to the market. And they don't have a measuring stick, they have a basket full of them. From BusinessWeek: "Many people think the definition of a recession is two consecutive quarters of decline in the gross domestic product. But that's a misperception. [the NBER] will look beyond such simple metrics, weighing monthly GDP estimates, employment data, income, industrial production, and other factors. To call a recession, they'll look for clear signs of "a significant decline in economic activity spread across the economy, lasting more than a few months." Any call, if it comes, is going to take a while. The NBER usually takes 6 to 18 months to decide when a recession starts or ends. Hall's committee didn't announce the end of the 2001 recession until a full 20 months after the fact... Also, an increase in GDP does not necessarily mean "growth." The way that they have measured this has changed over the past decade, and I think their analysis techniques are biased.

DanielBMarkham 18y ago

"Recessions are not defined as two quarters of negative GDP. Rather, it's a period of economic contraction." I've begun to hear this over the last year or so. While I understand the sentiment, unless you have a commonly defined measuring stick for "economic contraction", I think it's a generalization without a point. Just by googling around, it seems pretty clear that the rule-of-thumb is a negative change in GDP over two consecutive quarters. Now you can argue that GDP changes aren't reflective of the change in the economy, but if you do that, then you're stuck with coming up with a new definition. Not only that, but you would have to retrospectively go back and apply your new definition to historical financial data. Then you'd have to make an argument that the new definition matches up with the actual perception. I'm still on the fence about this. I think I'll wait until after the election heat cools off to read up some more. I hear you about the indicators you mention, but there are a lot of ways to slice a cake, and growth is growth.

DanielBMarkham 18y ago
This moderation system sucks. There was _nothing_ in the parent comment that made it any better or worse than any other comment. It was on-topic; it expanded the conversation; it didn't really make some big attack. It was just an honest observation. Go ahead -- down mod me for this one too. But when you downmod, you should be required to explain yourself.
steveplace 18y ago
Don't know why you got downmodded... Economists are generally lagging indicators when it comes to the market. And they don't have a measuring stick, they have a basket full of them. From BusinessWeek: "Many people think the definition of a recession is two consecutive quarters of decline in the gross domestic product. But that's a misperception. [the NBER] will look beyond such simple metrics, weighing monthly GDP estimates, employment data, income, industrial production, and other factors. To call a recession, they'll look for clear signs of "a significant decline in economic activity spread across the economy, lasting more than a few months." Any call, if it comes, is going to take a while. The NBER usually takes 6 to 18 months to decide when a recession starts or ends. Hall's committee didn't announce the end of the 2001 recession until a full 20 months after the fact... Also, an increase in GDP does not necessarily mean "growth." The way that they have measured this has changed over the past decade, and I think their analysis techniques are biased.