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?