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Pragmatic Capitalism

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IS THE GOVERNMENT UNDERSTATING THE SEVERITY OF THE RECESSION?

Great read here from the Brookings Institution on the extent of the downturn and how government issued GDP is understating the severity of the current recession:

“The U.S. produces two conceptually identical official measures of its economic output, currently called Gross Domestic Product (GDP) and Gross Domestic Income (GDI). These two measures have shown markedly different business cycle fluctuations over the past twenty-five years, with GDI showing a more-pronounced cycle than GDP. The goal of this report is to determine which measure better reflects the business cycle fluctuations in “true” output growth, and a broad range of results favor GDI. GDI currently shows the 2007-2009 downturn was considerably worse than is reflected in GDP.”

GDP as reported by the government:

Brookings findings on GDP (I):

Read the full paper below:


spring2010_nalewaik

Cullen Roche

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC.Orcam is a financial services firm offering asset management, private advisory, institutional consulting and educational services.He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance and Understanding the Modern Monetary System.
Cullen Roche

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