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May 26, 2011

Does U.S. Cook The Books On GDP Reporting? (part 2)

May 26, 2011

Does U.S. Cook The Books On GDP Reporting? (part 2)

Today’s BEA (Bureau of Economic Analysis) second of three 1Q2011 GDP readings shows a weak economy at +1.8% growth. Worse yet is that BEA using dubious assumptions to get from nominal to real (infaltion adjusted) data. BEA assumed that inflation in 1Q2011 was an annualized 1.9% despite the fact that the “official” metric from BLS showed it at 3.4%. If BEA used the BLS data for inflation real GDP growth for 1Q2011 would have been 0.56%. If one then subtracted out inventory growth and looked at “real final sales of domestic products” one would see contraction at 3.01%.

Not only is GDP weak but it’s worse than what’s being reported. It again raises the question: Does the US Cook Books On GDP Reporting?

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