Posts tagged Gross domestic product
Less than two weeks ago, three economists at the University of Massachusetts, Amherst published a rather technical paper that should have fallen like a bombshell on virtually all politicians and economic theorists on both sides of the Atlantic. An influential and frequently-cited study, one that had been used as a justification for austerity programs and budget cutting in both America and in Europe, it turns out, is wrong. Its findings were based on errors and omissions and some really absurd methodology.
This is no academic discussion that can be confined to ivy-tower theoretics. This affects the lives of every American, every European, and probably most people in most developed countries all over the world. Some of the most important bases for conservative arguments against current levels of Western debt are completely wrong.
Remember how we’ve been warned for the last few years that if a nation’s debt gets close to 100 percent of GDP, this spells inevitable disaster? That argument, it turns out, comes from errors and omissions in an Excel spreadsheet. (more…)
On January 30th, the Bureau of Economic Analysis issued its initial estimates of the real gross domestic product in the fourth quarter of 2012. Following is the beginning of the accompanying news release:
Real gross domestic product — the output of goods and services produced by labor and property located in the United States — decreased at an annual rate of 0.1 percent in the fourth quarter of 2012 (that is, from the third quarter to the fourth quarter), according to the “advance” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.1 percent.
The Bureau emphasized that the fourth-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see the box on page 4 and the “Comparisons of Revisions to GDP” on page 5). The “second” estimate for the fourth quarter, based on more complete data, will be released on February 28, 2013. (more…)
Last week, the Bureau of Economic Analysis published a report indicating that the gross domestic product decreased by an annualized 0.1 percent in the fourth quarter of 2012. Everyone (at least in politics) reacted as if the GDP drop was a bad thing. Democrats blamed Congressional Republicans. Most Republicans blamed Congressional Democrats (though some blamed President Obama). But was the report really that bad?
As with so many economic questions, the answer depends on one’s perspective.
Part of the problem here is that we typically point to changes in GDP as the indicator of the economy. It’s not that GDP is a bad metric, but, like all economic metrics, it needs to be viewed in context. The private sector grew in the fourth quarter. Again. And this happened despite drawdowns in private sector inventory. (more…)
On Wednesday, the United States Bureau of Economic Analysis announced that the Gross Domestic Product decreased in the fourth quarter of 2012 by an annual rate of 0.1 percent. It’s the first contracting quarter since 2009.
Granted, we’re not talking about a large contraction, but the results were particularly jarring, in light of the third quarter’s expansion at a 3.1 percent annual rate. And any contraction is potentially dangerous to the overall economic health of the nation.
Of course, people started assigning blame right away. (more…)
On November 29th, the Bureau of Economic Analysis released the preliminary estimate of corporate profits for the 3rd quarter of 2012 (a revised estimate was released on December 20th). Soon after, a number of publications ran stories reporting that corporate profits had reached a record high while wages had fallen to a record low. For example, CNN Money ran an online story on December 4th. Following is an excerpt:
In the third quarter, corporate earnings were $1.75 trillion, up 18.6% from a year ago, according to last week’s gross domestic product report. That took after-tax profits to their greatest percentage of GDP in history.
But the record profits come at the same time that workers’ wages have fallen to their lowest-ever share of GDP.
“That’s how it works,” said Robert Brusca, economist with FAO Research in New York, who said there is a natural tension between profits and the cost of labor. “If one gets bigger, the other gets smaller.” (more…)
As part of the deal that raised the debt ceiling and created the deficit supercommittee, Congress must vote on a Balanced Budget Amendment. The House is scheduled to do so on Friday. The Senate will take up the bill within the next two weeks.
The text of the bill before the House, S.J.Res.10, can be found here. The Amendment it proposes (the text of which is included in the bill), is a stunningly bad idea. The concepts it embodies are based on economic theories already proven false. It has no viable enforcement mechanism. It imposes impossible requirements. It contains limits on the budget that cannot be realistically determined. It makes possible (and even likely) some catastrophic situations. It is a dangerous piece of destructive propaganda.
To show you what I mean, let’s examine some of its more obvious failings by going through its provisions, one at a time. (more…)