The overall GDP report is here
I have one big problem with this report. The GDP price deflator increased .8%? That is really low and just doesn't add up. The second lowest deflator over the last few years is 1.7 in the fourth quarter of 2006. Aside from that number and this month's number, most deflators are over 2% (see table IV in the link above). Playing the Sesame Street game "One of these things is not like the other one", that number should raise a ton of eyebrows.
Considering oil is near a record level, agricultural prices are in the middle of a multi-year bull run as are some metals, a deflator that low just doesn't add up.
Here's how the WSJ reported the inflation numbers from the report:
The price index for personal consumption expenditures rose by 1.7% after increasing 4.3% in the second quarter. But the much-watched PCE price gauge excluding food and energy accelerated, rising 1.8% after increasing 1.4% in the second quarter. Other price gauges in the report showed slowing inflation [BD's note -- really? Seen a chart of oil, agricultural or metals prices lately?], including the price index for gross domestic purchases, which measures prices paid by U.S. residents. It rose 1.6% after increasing 3.8%. The chain-weighted GDP price index increased 0.8% after increasing 2.6% in the second quarter.
5 comments:
BD,
I would help if you were to say more about why you think the GDP price deflator is low and why. Or are you saying that you don't have a clue? Is the number fudged? Do they need sharper pencils? Maybe a few words about the significance of the deflator would help. --L
"I have one big problem with this report. The GDP price deflator increased .8%? That is really low and just doesn't add up."
Why? The September CPI was 208.49, versus 208.352 in June (and that's not core!). I calculate the increase in CPI from Q2 to Q3 as 0.276%. Of course, those aren't the right numbers to use for GDP because they leave out producer prices etc., but it doesn't seem wildly off base.
The big price increases were this past winter and spring, following the exaggerated seasonal trend we've been seeing in gas prices the past few years. CPI increased a full 3.25% from Dec. '06 to June '07! I think the delayed reaction from this is what has people screaming, despite the fact that there really has been a deceleration in the past few months.
Pay no attention to that man behind the curtain !
Hale, "The Fallacy of the stagnating middle class" has recently become a popular headline and the conservatives are buzzing over the piece below by senior economist Terry J. Fitzgerald who claims we've been measuring wages incorrectly, a problem that he's 'fixed' only to realize that wages have increased, not decreased:
http://www.minneapolisfed.org/pubs/region/07-09/wages.cfm
I'd love to hear your thoughts on this.
RE: Why the low GDP Price Deflator % increase
Is this because it is not based on a fixed basket of goods?
Thank you
Post a Comment