Not Everyone Is Buying 3.7% U.S. GDP in 2Q; “Only the Chinese Numbers Are More Suspect”
by Pam Martens and Russ Martens, Wall Street on Parade
When the revision to second quarter Gross Domestic Product was released by the Commerce Department on August 27, boosting GDP to 3.7 percent, it had a lot of people scratching their heads. Consumer Metrics Institute came right out with it, writing: “Once again we wonder how much we should trust numbers that bounce all over the place from revision to revision. One might expect better from a huge (and expensive) bureaucracy operating in the 21st century. Among major economies, only the Chinese numbers are more suspect.” Ouch.
Jeffrey Sparshott and Jon Hilsenrath, economic writers at the Wall Street Journal, were more subtle in their assessment, suggesting that “How fast the economy grew depends on how you measure it. An alternative measure, gross domestic income, advanced at a much slower 0.6% pace last quarter. Both GDP and GDI measure overall economic activity but tap different source data: GDP uses expenditures and GDI uses incomes. While they should move in the same direction, there are often short-term discrepancies.” The difference between 0.6 percent growth and 3.7 percent growth might be viewed by some as more than a “discrepancy.” Not to put too fine a point on it, but 3.7 is more than 6 times the rate of growth as measured by Gross Domestic Income for the second quarter. Continue Reading>>>