Ahhhhhh…not so fast.

First off, what is “GDP” in this context?

GDP is short for Gross Domestic Product. GDP is the monetary measure of the value of all the goods and services produced in a specific time period in a country. GDP is a measure its economic health.

But, there are three different measures of GDP that are used by the government and economists. The one being referred to in the headlines is apparently “real GDP”, meaning it is adjusted for inflation. And that is a good thing, a more accurate picture, or supposedly so.

Let’s take a closer look…so GDP is up 4.9% is being touted as a proof that the economy is strong and there are no worries in the US from a financial perspective. And they are using a number that is already adjusted for inflation makes it a credible and accurate “fact” right?

Well, first off…inflation is calculated based on the price of 200 items in urban areas. And “core inflation” the primary one used by government does not include food or fuel. It also doesn’t calculate in interest rates on loans, credit cards, etc.

But…interest paid is included in GDP calculations.

Did you notice the “ urban areas” part? Yup, so if you live in the suburbs or outside of city limits…the price you pay for stuff is not included in the inflation calculations. Nice, eh? Makes it very accurate and appropriate for everyone…what?

What does that GDP and inflation information mean?

If you listened to most reporting of the stellar GDP number, you probably didn’t hear that consumer spending was up 4%. Now that may sound great too…folks are spending money. Yea!! The economy MUST be good, right?

Here are some of the real facts:

1. Interest rates have skyrocketed this year; mortgage rates, credit card rates, car loan rates, etc. all of them up. And those higher interest payments are included in consumer spending (up 4%) but not adjusted for inflation since interest rates are not included in calculating inflation.
2. Student loan repayments started back up in October (last month of the 3rd quarter). This caused millions of people to start spending big money they previously hadn’t. Which means it is included in the GDP going up and not included in inflation.
3. I don’t know about where you live, but here gas went from $3.69 to $4.29 in the 3rd quarter they are bragging about. Yeah, gasoline up 16% in that quarter. And that wasn’t included in in the inflation calculation which means the GDP was “adjusted” for it. Meaning…all the extra money that you spent on gasoline is included in the GDP going up…and also is included in the increase in consumer spending…but not included in the inflation figure.
4. When was the last time you went to the grocery store and saw prices go down? Yeah, thought so! Meaning those food price increases are included in GDP but not included in inflation.

All of this means:

1. Inflation appears to be going down but doesn’t include the increases in gasoline, food, or interest rates.
2. Consumer spending is going up but that is due to higher prices of everything, especially gasoline, food, student loan payments, and interest rates.
3. And that all means that the GDP bragging going on is FALSE!!

And let’s not leave the government out of this…with their mulit-multi-trillion dollar budget pumping money at an historic rate into the US economy…and included in the GDP numbers. But not factoring in for the multi-trillion dollar federal budget deficit adding to inflation.

Yup, the only reason GDP is up is much higher prices that consumer is paying gasoline, food, interest rates, and millions of people now paying on their student loans. Along with the US federal government’s out-of-control spending.

You can test that a number of ways:

1. Huge increase in the percentage number of people paying for essential living expenses with credit cards and NOT using their paychecks because their paychecks are no longer large enough.
2. Historic amount of credit card and personal debt.
3. Historic percentage of credit card and car loan default rates.
4. Historic number of people living paycheck to paycheck…including those making over $100,000 per year.
5. Historic number of people with historic low amount of money in savings…under the $400 threshold!

Listen to just a sampling of economists:

• “Your middle-class consumer is being hammered by inflation, by oil prices, by cost of living…”
• “The U.S. is no longer the central [economic] power.”
• Mini-millionaires is the fastest growing wealth sector of Americans, second is the top 1% of Americans. (Are you in one of those categories?)
• “…low- and moderate-income Americans have depleted much of their excess cash reserves and taken on more credit card debt even as borrowing costs are rising and banks are tightening their lending standards.”

But test is the best way of all…How are your fiances doing?

Is your income going up faster than gas or food prices? Are your bills making you grimace as you pay them? In hard-core real terms…how are your finances doing? Your rent going up? Has your mortgage payments gone up or down? How about insurance…your payment/rates going up or down?

Then again…BELIEVE THE US GOVERNMENT FIGURES ! ! ! ! The economy is great! Good times are here! Everything is just fine! Now, move along…nothing but good news here…move along…like a good little sheep.

Happy Days Are Here Again !!!!

Ah, hold on just a second…let’s recap…

• The US federal government manipulated inflation to not include three huge items (food, fuel, & interest) to make inflation look much lower than it actually is.
• The US federal government manipulated GDP, adjusted for false lower inflation, making it look better than it actually is…especially since interest payments are a huge part of the so-called increase/improvement in GDP.
• The US federal government surely has never and would never lie to us or try to deceive us.

Oh never mind all of that…life is great, the economy is booming, country’s financial situation is wonderful!!!!

Move along…nothing to see here.

 

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