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Second Quarter GDP

First quarter GDP was pretty good. I’ll only add that there are two more estimates to be released. BEA’s revisions have been pretty substantial in recent years. My guess — and it’s only a guess — is that the 4% growth rate will be revised downward over the next two months.
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Healthcare Spending and First Quarter GDP

Well, it happens that there’s a country just north of us that had about as bad a winter as the U.S. That’s Canada, where first quarter GDP grew 2.2%. This growth occurred despite a contraction in gross investment (-1.6%) and a huge drawdown in business inventories of -$495 million (Canadian dollars, of course). Somehow, even faced with harsh winter conditions, those intrepid Canadian consumers managed to increase spending by 2.6%. Perhaps Amazon.com and Google shopping are easier to use north of the border. Continue Reading →

What Really Happened in the First Quarter

The U.S. economy is in for a rough time in 2014. In large part this has been caused by the implementation of Obamacare, the Dodd-Frank financial reform act, and the flood of new regulations emanating from a plethora of U.S. government agencies. I’ll just mention the de facto war on coal being waged by the EPA and the broad use of “disparate impact analysis” in the Department of Labor. Continue Reading →

National Income Accounting and the Most Recent NPR Fail

The more subtle issue is a complete misunderstanding of what GDP measures. Most principles of economics texts get this pretty much: gross domestic product is the market value of all goods and services produced in a country during a calendar year. Read that again and see if you can find the words “spending” or “transactions.” You can’t because GDP measures neither of those. GDP measures production, not spending. Continue Reading →