Economic Populist Commentary

Economic commentary by a pro-capitalist, economic populist. Demand-Side Economic theory. Consists of author's economic views. Questions & comments appreciated. Dissenting views are VERY welcome and encouraged. Main "agenda" is crafting and advocacy of a "populist" economic agenda. A secondary goal is prevention of an economic Armageddon. Encouraging open discussion of US economy.

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The author is a physician by profession, and a "student economist" by necessity. The current status of our economy necessitates the latter. The intent of this blog is to explain and discuss economics in layman terms. It is designed to promote thought and discussion. It is written by a layman. Comments and critiques of these theories and letters are welcome and ENCOURAGED. Dissenting comments are also WELCOME! They form the basis for discussion.

Sunday, July 29, 2007

GDP Declined in 2nd Quarter, prior to manipulation.


2nd quarter 2007 GDP was actually less than originally posted GDP for the 1st quarter of 2007. (i.e., 2nd quarter GDP growth was negative). Once again, however, the BEA (Bureau of Economic Analysis) manipulated the numbers enough to arrive at a positive 2nd quarter GDP growth. The originally published 1st quarter GDP was downwardly revised by a whopping $137 billion, from the original $11,549 billion down to $11,412 billion.


Again, real GDP growth would have declined for the 2nd quarter, had 1st quarter GDP not been downwardly revised. On the 4/27/07 1st quarter GDP report, the annualized GDP was published as $11,549 billion (in chained 2000 dollars).

On 7/27/07, the GDP report put 2nd quarter annualized GDP $41 billion less than the 1st quarter, at only $11,507.9 billion. This would have made 2nd quarter GDP growth -0.355%. Below is a composite chart from the BEA showing the GDP comparisons. The top 2 charts are from the latest report on 7/27/07. The bottom chart is from 4/27/07. The real GDPs for the 1st quarter are underlined in blue (chained 2000 dollars). The current dollar GDPs for the 1st quarter are underlined in red.




Once again, an after-the-fact revision in previously published numbers has been used to falsely 'create' economic growth.

In this case, it seems pretty clear that 2nd quarter GDP growth should have been negative, and that we are now experiencing recessionary GDP declines.


ADDENDUM:

Also worth noting is that July 27th's GDP was not only lower than the originally posted GDP for the 1st quarter of 2007, it was also less than the previously posted GDP for the 4th quarter of 2006. Thus the cumulative real GDP growth for the 2 quarters ending with the 2nd quarter of 2007 would have been negative, had 4th quarter 2006 and 1st quarter 2007 not been revised downward.

Thus this averages out to 2 consecutive quarters of negative GDP growth-- the textbook definition of a recession.

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