The Bureau of Economic Analysis released the Fourth Quarter GDP (Q4) data today [DATA HERE], and the White House will likely spin a victory message. However, the real economic picture is covered by the continued storm of inflation.
Gross Domestic Product (GDP) is the dollar value of all goods and services produced in the economy, minus the dollar value of goods and services we import. The percentages discussed are percentages of change over time.
The fourth quarter result was an increase of 6.9 percent over the prior quarter.
The total U.S. economy is now estimated around $23 trillion annually. [Tables pdf Here]
What the GDP doesn’t show is the diminished purchasing value of the dollar and/or the actual rate of inflation which towers over the valuation. With goods and services costing much more, the estimated value of those goods and services (the amount of money spent on them) increases.
Because we are in a severe inflationary cycle, the resulting evaluations of the economy are skewed. The BEA attempts to remove the inflationary impact of their evaluations, but they do so by using a 5.5% inflationary rate, which is a much lower inflation estimate than actually exists.
Essentially, there is so much inflationary noise in the prices of goods and services, any calculations by the government are simply estimates of what they think the value of the underlying economic activity is worth. Bean counters are paid to count beans with rules on what each bean is worth. If the rules are wrong, the valuation result from the counters is wrong.
To give you an idea of how far these figures can be flawed, let me share an example of costs from a company and sector that touches all our lives.
DOW chemical is likely the one company in the world that generates more originating products and raw materials than any other. DOW touches your life and is likely the raw material provider for almost everything around you. DOW generates petroleum chemicals, plastics, rubber and solvents that are in virtually everything.
From cars, clothes and furniture to plastics, Styrofoam and containers, DOW is the originating manufacturer of almost all of it. Dow provides the originating material in the supply chain that is then carried forward into all levels of manufacturing.
One sentence from Dow is all you need to see to understand what the current rate of inflation is within the supply chain:
“Prices climbed 39% in the fourth quarter from a year earlier, while volumes fell 4%.” (link)
The cost of producing and processing the industrial products that Dow handles jumped 39%. Those massive increases in costs are at the very beginning of the supply chain. Those prices are then passed along to the next level of manufacturing, and then the next level of component creation, and then the next level of assembly, until a final product is created, sold, transported and delivered to the seller.
The beginning product, the raw material, starts with a 39% increase in price. That is the scale of origin level inflation that works its way through the system until it finally reaches us.
Notice, Dow also said the net volume of their product outputs “fell 4%.” So, they made less stuff at a much higher price.
Take that example and overlay it into the GDP consideration. Remember, the GDP isn’t a measure of the actual outputs of stuff created, the Bureau of Economic Analysis is only measuring the aggregate value of the stuff, ie. what it’s worth.
- 20 trillion units at $1.00 per unit equals $20 trillion dollars.
- 20 trillion units at $1.05 per unit equals $21 trillion dollars.
- An increase of 5% in economic valuation (GDP), but we haven’t created a single product more.
Did our economy expand at 6.9% in the fourth quarter? Or are we just seeing the increased valuation of goods and services, while the actual outputs in the economy are shrinking?
Did you pay 20% more at the grocery store and leave with 20% more food stuff? Or did you pay 20% more at the checkout and leave with the same or less food stuff than previous?
I think we all know the answer to those questions.
Checkbook economics is the only economics that matters.
PedoJoe46 and the demOCrats can try to spin it any way they want….
but when American’s energy, food, fuel, and replacement goods prices are seen going up 25-50-100%….
Americans know something is wrong.
I have nine coworkers that do not understand why prices are rising……they are full blown Marxists…. I don’t even try to explain anything to them
My manager is having a new house built and he doesn’t understand why the costs keep going up….he complains at least once a week
I sell products used in industry of the type that DOW, 3M and others produce. Adhesives, paper, plastics, steel, and wood products are up 60-80% from a year ago. I can show you the numbers. Only in the last month have a FEW things started to moderate (polyethylene based plastics), but only a tick or two.
“The fourth quarter result was an increase of 6.9 percent over the prior quarter.”
Sorry, it was not. In the fourth quarter real GDP grew at a 6.9% annualized rate. Does not harm the point you make which is highly valid imo. Actual total year 2021 real GDP grew at 5.7% according to the release while nominal or current dollar value numbers were 14% for the quarter and 10% for 2021. So an actual inflation rate at 10% for the year would make real GDP equal to zero, any higher inflation number would make it negative.
Bingo
With that 6.9% number for GDP increase over the previous year, the Occupant and his cohorts are merely touting the fact that the cost of living has risen 6.9% (wildly lower than it actually is, we all know!), which is nothing to be proud of. Of course, this two-bit tyrant and White House squatter knows that people will fail to see the gross misrepresentation of these facts and that they will somehow interpretate this figure as a rise in productivity, something it is decidedly not.
The mainstream media hores are pushing this information as great news.
[Oscar Meyer is increasing prices by 30%….. announced today]
Also saw an article headline that Xiden beats Gov. DeSantis and Pres. Trump in election for president.
‘Dominion Poll’ results?
Hahaha! That’s funny.
Will it take the collapse of the entire economy for people to wake up or at least question what is going on?
Yes!
The Secy’s of Commerce has some confusion over her nouns. Methinks she is calling urine, rain.
https://therightscoop.com/biden-commerce-secretary-dont-believe-your-lying-eyes-this-is-a-very-strong-economy/
Excellent article, Sundance.
Just to give folks another example of how much recent events have REALLY affected the price of durable goods, I just got a quote for 5 high-quality, outdoor, cushioned, coated aluminum swivel chairs. The quote … $10000, and that’s IF I accepted what was in stock color and fabric-wise (with very limited choices). It cost more if I ordered the fabric/color I really wanted and there was a 1 year plus! delivery time. Now 11 years ago, I purchased a outdoor table, 2 swivel chairs, and 2 non-swiveling chairs … all of the exact same model and by the exact same manufacturer as the current quote … for a TOTAL of $1840 … less than 1/5th the amount. I kid you not. Needless to say, I didn’t purchase the additional chairs and I shudder to think what it would cost if I had to completely furnish a new home these days. Fortunately, I don’t.
One more observation. According to Fox News (https://www.foxbusiness.com/economy/december-inflation-breakdown-rising-prices), the Bureau of Labor reported that the inflation rate for furniture in 2021 was *just* 17%, and using other sources, much less the two years before that, and mostly negative in the 8 years before that. That doesn’t at all square with this experience. I suspect the majority of the price increase occurred since the pandemic began. So I suspect this is mostly because of UNIPARTY/Chinese policies, to which I say Let’s Go Brandon … and same for the UNIPARTY/Communist Chinese.
I signed a contract to build an addition to our house in July. Told my contractor I would not accept price increases for materials, he Best Buy them right away and he could store them on site,. We bought our flooring, stone, lumber. Undecided on one major item – roofing material for addition, and possibly the whole house (needs new roof in next 5 years, may as well do it now). Contractor pushed cedar shakes. I wanted raise seam. Wife wanted galvanized aluminum shingles. Guess who won. contractor told me that if we wanted cedar shakes right now — forget it. Price went up 500% – FIVE HUNDRED PERCENT, and you can’t get them anyway, anywhere, no how.
Bought our windows in June. Canadian manufacturer. Hoping truckers will deliver them. Prices up 15% since we purchased. Wait time out to close to a year.
Put in for buiding permit in May 2021. Supposed to take 2 weeks. There s no plumbing, all as-of-right, not even changing footprint since we are taking down a two-story porch. Town claims “covid delays”. Farms out work to “consultant.” EIGHT MONTHS to get the permit. Four grand fee for the simplest building permit imaginable.
Let’s Go Brandon.
The people are not stupid….and there many more of us than there are of them. They are just small cogs.
Looking for the revelation of who is running the show….making them look big when they are very small indeed.
Baloney! Pure garbage. Jolly joy, more gaslighting out of DC.
Does the Biden gang cook the books and the MSM stooges cover for them?
Dow’s stock went up over 5% today. CEO says they love inflation. https://seekingalpha.com/news/3792682-inflation-has-always-been-a-positive-for-our-business-dow-ceo-says
wow. that was a very impressive lesson in the reality of the situation and explainer. I’ve always had difficulty understanding big economic principles. In less than 3 minutes reading, you have just given me an education I never seemed to locate anywhere or to understand even when reading it.
this paragraph: Take that example and overlay it into the GDP consideration. Remember, the GDP isn’t a measure of the actual outputs of stuff created, the Bureau of Economic Analysis is only measuring the aggregate value of the stuff, ie. what it’s worth.
I think I have a “block” about such matters, because there has always been a skepticism I have held about the “official numbers”.
and I formed this skepticism simply by evaluating my check book and prices available to me and the goods (and quality and availability) of them. I never could reconcile why my experiences in the real world never quite matched up at all to the official description.
great work sundance. I filed this one away for reference when I have “that talk” with my daughter and how things really are versus how they are “framed” to be.
When the Freedom Convoy is done in Canada we need to invite and join them to DC. Imagine doubling the size. Remember under Obama when groups would randomly block the highways? It made me so mad, well I think it’s time to do the same to DC.
This is as bad as I have ever seen it. There is literally no place to make money investing right now.
Equities are over-valued and look on the verge of collapse.
Interest rates are rising, so bond prices will fall.
Gold is DROPPING as inflation accelerates.
Crytpo is going down and sideways.
Oil is up but are you going to go long at $90 a barrel? And how much of your portfolio?
Cash is a disaster.
TIPS are priced well past breakeven
No place to hide from this.
Let’s go Brandon.
Ah! But now you see the logic of the destruction of the free enterprise system. It makes socialism look appealing, but more importantly, it ultimately makes socialism an absolute imperative when the economy collapses. How far will we let them go?
We are on a speeding train to Nov. 2022. However, how fast is the train of economic destruction traveling and which of the two will arrive first at its destination?
In my study of history, I’ve noted that the left only advances through crises that they themselves create, or instigate through acts of willful manipulation (1929, 2008, 2020 etc), or acts of domestic terrorism and murder. They have never paid the price for these acts.
In sum, we have all been victims of a Marxist coup d’etat that the Roberts Court has absurdly blessed. Republican majorities should therefore put to the test the true legal convictions of this kangaroo court in order to seize the same broad investigatory powers to put under a microscope the obvious corruption we have witnessed. The legal precedents already exist, and it is no mystery why Pelosi wants to stay in office. She can’t stray too far from the very committees that will be investigating her obvious involvement in the breach of security at the Capitol on Jan. 6.
Our Supreme Kangaroo Court will regret it Marxist enthusiasms!
the only companies gaining there days a Big Pharma, and they are criminals.
This was an old Ozero trick. He did it with unemployment numbers too.
Political manipulations by the Biden Administration.
Joe can move the decimal points where ever he likes!
3M and International Polymer Group have an across the board 15% price increase going into effect 2/1 on all industrial products at the wholesale level. It ain’t over.
Newsflash: If you claim the economy grew by 7% and inflation is 8% , the economy actually shrank by a %1
Are all the money drain going to this, feeding/housing free-whatever? Putting them in place for the invasion? no media has yet to report the rising numbers in deaths of young adults from vaccines. The only one so far is from Funeral
director John O’Looney of Milton Keynes family funeral services in Milton Keynes, England shared in his recent interview
with kla.tv that deaths are at unprecedented levels at young people in their 20s, 30s and 40s and “all were vaccinated.”
I guess this is the preliminary effectiing step while more young healthy males (more than children or women), on top of
tracking citizens but none on the illegals pouring in – are pouring into US – sent to different cities for when the Dims
activate the invasion of homes, raping women (I keep thinking of “We will take your women” chants not unfamiliar to
many). Those who grow or hoard food, after they have incapacitated/bankrupted farmers – those who have started to grow their own food, these will be the first places targeted – while they choke supply chains further. Failing to seize gun control, what are the people’s guns going to do when hundreds are prepped to do their pillaging, raping, killing, looting and taking over personal property: 1 at a time? Is this the second or third phase of the planned BHO/Omar/T’alib – gang of 4 pushing on for an ethnic cleansing? Just asking because I can’t shake this off – echoes of historical invasions and end-times scenarios.
Biden admin torched over bombshell footage – ‘Literally breaking the law’
1,777,626 views
Jan 27, 2022
Fox News
Former Westchester County Executive Rob Astorino joined ‘America’s Newsroom’ to discuss the bombshell footage.
#FoxNews