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Ok, let's play your game. How much of the first quarter decline was due to the ports clearing and imports rising? Here, I'll give you a hint (More than 100%):

by RC_ITR 4y ago

Ok, let's play your game. How much of the first quarter decline was due to the ports clearing and imports rising? Here, I'll give you a hint (More than 100%): https://fred.stlouisfed.org/graph/fredgraph.png?g=UOxC https://fred.stlouisfed.org/graph/fredgraph.png?g=UOxC Do you think that's a real recession indicator? EDIT: Said differently, if our imports were at 4Q:21 levels, we'd have 0 quarters of decline. So is this the first import-driven recession? Because no other recessions have been like this.

pishpash 4y ago
Doesn't matter the reason, net net less goods were produced. Imports couldn't stay at 4Q:21 levels forever, only the timing of the imports was shifted around.
- RC_ITR 4y ago
  >Doesn't matter the reason, net net less goods were produced. That's not how GDP works? It's not adding up all the things that were made, it's measuring the value an economy produced. A quirk of that is imports are value an economy consumes (usually offset by Foreign Direct Investment). If those ships decided to bail from LA and head to Japan, would the economy have 'produced less'?
  - pishpash 4y ago
    Isn't your whole point that goods were already paid for in one quarter but were held up until the next quarter to clear? If consumption and import were in the same quarter then it doesn't affect GDP at all in an accounting sense. But in your example, you get a +GDP in the quarter that consumption happened, making it seem like domestic production went up, then against that baseline you get a -GDP "due to" imports the next quarter, so you must "lose" the domestic production as a correction. If the ships bailed and stole your money or destroyed their goods I'm not sure if that still counts as imports or not.
    - RC_ITR 4y ago
      My point is that an amount of economic activity happened (let's simplify and say that its consumption/investment/government spend). GDP measures how much a country makes, but that's only a proxy for economic activity because trade imbalances exist (and the US economy greatly benefits from its trade imbalance). So the unprecedented lumpiness of imports shouldn't mislead you into thinking US domestic economic activity is down, when in fact it's just being financed differently (now more via trade imbalance than in previous quarters). Again, all circling back to my point that the 2Q's of GDP rule is dumb.
WillPostForFood 4y ago
Imports are neutral in their impact on GDP (it is domestic product after all). Imports are included in investment/consumption/govt spending, then subtracted back out: net zero. So imports rising definitely was not the cause of decreased GDP.
- RC_ITR 4y ago
  I'm glad you're confident, but you're wrong. Net exports is a component of GDP and it's exports minus imports. IDK where you got the idea you did. > (it is domestic product after all) Yeah, so buying more from overseas than you sell overseas is a net drag on the economy. EDIT: Like here's the release, check it out for yourself. The tables start on page 11. https://www.bea.gov/sites/default/files/2022-09/gdp2q22_3rd.pdf https://www.bea.gov/sites/default/files/2022-09/gdp2q22_3rd....
  - WillPostForFood 4y ago
    GDP isn't a measure of "net drag". It is a measure of "domestic production". Imports might be relevant to some other measure of economic health, but they are irrelevant to the total value of domestic production. You want to ignore or exclude them when calculating GDP. But they are hard to exclude, because they get commingled with spending/consumption/investment. So what do you do? Leave them there, but then subtract total imports. They are counted positively, and negatively, so they have no net impact. Think it through and it should make sense.
    - deleted 4y ago
      [deleted]
    - RC_ITR 4y ago
      Ok so now I get your convoluted point, but then great let's exclude net exports, the other categories like PCE etc. haven't declined? EDIT: I want to give you the benefit of the doubt here because I like where you're headed (ignoring the timing effect that would make GDP useless under your framework), I really do, but let me chew on this. Because it is interesting, though it does completely ignore FDI (which is how imports are paid for)

by RC_ITR 4y ago

pishpash 4y ago

Doesn't matter the reason, net net less goods were produced. Imports couldn't stay at 4Q:21 levels forever, only the timing of the imports was shifted around.

RC_ITR 4y ago
>Doesn't matter the reason, net net less goods were produced. That's not how GDP works? It's not adding up all the things that were made, it's measuring the value an economy produced. A quirk of that is imports are value an economy consumes (usually offset by Foreign Direct Investment). If those ships decided to bail from LA and head to Japan, would the economy have 'produced less'?
- pishpash 4y ago
  Isn't your whole point that goods were already paid for in one quarter but were held up until the next quarter to clear? If consumption and import were in the same quarter then it doesn't affect GDP at all in an accounting sense. But in your example, you get a +GDP in the quarter that consumption happened, making it seem like domestic production went up, then against that baseline you get a -GDP "due to" imports the next quarter, so you must "lose" the domestic production as a correction. If the ships bailed and stole your money or destroyed their goods I'm not sure if that still counts as imports or not.
  - RC_ITR 4y ago
    My point is that an amount of economic activity happened (let's simplify and say that its consumption/investment/government spend). GDP measures how much a country makes, but that's only a proxy for economic activity because trade imbalances exist (and the US economy greatly benefits from its trade imbalance). So the unprecedented lumpiness of imports shouldn't mislead you into thinking US domestic economic activity is down, when in fact it's just being financed differently (now more via trade imbalance than in previous quarters). Again, all circling back to my point that the 2Q's of GDP rule is dumb.

WillPostForFood 4y ago

Imports are neutral in their impact on GDP (it is domestic product after all). Imports are included in investment/consumption/govt spending, then subtracted back out: net zero. So imports rising definitely was not the cause of decreased GDP.

RC_ITR 4y ago
I'm glad you're confident, but you're wrong. Net exports is a component of GDP and it's exports minus imports. IDK where you got the idea you did. > (it is domestic product after all) Yeah, so buying more from overseas than you sell overseas is a net drag on the economy. EDIT: Like here's the release, check it out for yourself. The tables start on page 11. https://www.bea.gov/sites/default/files/2022-09/gdp2q22_3rd.pdf https://www.bea.gov/sites/default/files/2022-09/gdp2q22_3rd....
- WillPostForFood 4y ago
  GDP isn't a measure of "net drag". It is a measure of "domestic production". Imports might be relevant to some other measure of economic health, but they are irrelevant to the total value of domestic production. You want to ignore or exclude them when calculating GDP. But they are hard to exclude, because they get commingled with spending/consumption/investment. So what do you do? Leave them there, but then subtract total imports. They are counted positively, and negatively, so they have no net impact. Think it through and it should make sense.
  - deleted 4y ago
    [deleted]
  - RC_ITR 4y ago
    Ok so now I get your convoluted point, but then great let's exclude net exports, the other categories like PCE etc. haven't declined? EDIT: I want to give you the benefit of the doubt here because I like where you're headed (ignoring the timing effect that would make GDP useless under your framework), I really do, but let me chew on this. Because it is interesting, though it does completely ignore FDI (which is how imports are paid for)