From Real Time Economics:
Investors rely too heavily on the quarterly gross domestic product report to understand the current economy. And they’re not even looking at the right figures.*From Business Insider:
Those are the arguments Zach Pandl, senior interest rates strategist at Columbia Management, makes in a paper published Monday titled “Why GDP Deserves Less Attention.”
“Unfortunately, the saying about laws and sausages also applies to the GDP accounts: as we learn more about how they are made, our appetite declines in equal proportion,” Mr. Pandl writes.
Regular revisions based on newly available data help the Commerce Department measure the nation’s economy more comprehensively. But the department’s Bureau of Economic Analysis, which assembles the measure of GDP, says its reports are a trade-off between timeliness, accuracy and relevance. Most statistical agencies, including BEA, release reports based on incomplete data and later revise them....MORE
In Devastating Detail, JPM Economist Explains Why The Growth Potential Of The United States Is Nothing Like It Used To Be
Bad news: owing mostly to demographics trends and slowing technological innovation, America may be facing a long road of low growth ahead.
In a new report, JPMorgan economist Michael Feroli explains why the country's future isn't what it used to be by demonstrating that potential GDP growth – a proxy for the long-run trend growth rate – in the United States has fallen below 2%.
"As recently as the late 1990s, potential growth in the U.S. was estimated to be around 3.5%; by our estimates that figure has recently fallen by half, to 1.75%," says Feroli.
Potential growth is a function of two variables: the growth of America's workforce, and growth in that group's productivity levels....MORE
