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Author Topic: Obama's GDP - How is it measured?  (Read 2737 times)
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WhiskeyGirl
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« on: January 29, 2010, 05:10:50 PM »

I'm looking around and it seems like it's measured a few different ways.

from the wiki-

Quote
Example: the expenditure method:

GDP = private consumption + gross investment + government spending + (exports − imports)


Quote
Components of GDP by expenditure
GDP (Y) is a sum of Consumption (C), Investment (I), Government Spending (G) and Net Exports (X - M).

Y = C + I + G + (X − M)
Here is a description of each GDP component:

C (consumption) is normally the largest GDP component, consisting of private household expenditures in the economy. These personal expenditures fall under one of the following categories: durable goods, non-durable goods, and services. Examples include food, rent, jewelry, gasoline, and medical expenses but does not include the purchase of new housing.

I (investment) includes business investment in plant, equipment, inventory, and structures, and does not include exchanges of existing assets. Examples include construction of a new mine, purchase of [software], or purchase of machinery and equipment for a factory.

Spending by households (not government) on new houses is also included in Investment. In contrast to its colloquial meaning, 'Investment' in GDP does not mean purchases of financial products. Buying financial products is classed as 'saving', as opposed to investment. This avoids double-counting: if one buys shares in a company, and the company uses the money received to buy plant, equipment, etc., the amount will be counted toward GDP when the company spends the money on those things; to also count it when one gives it to the company would be to count two times an amount that only corresponds to one group of products. Buying bonds or stocks is a swapping of deeds, a transfer of claims on future production, not directly an expenditure on products.

G (government spending) is the sum of government expenditures on final goods and services. It includes salaries of public servants, purchase of weapons for the military, and any investment expenditure by a government. It does not include any transfer payments, such as social security or unemployment benefits.

X (exports) represents gross exports. GDP captures the amount a country produces, including goods and services produced for other nations' consumption, therefore exports are added.

M (imports) represents gross imports. Imports are subtracted since imported goods will be included in the terms G, I, or C, and must be deducted to avoid counting foreign supply as domestic.

Why wouldn't the GDP be up when you take into account all of Obama's spending?  The more he spends, the better GDP may look in this equation.

What about the debt?  Unemployment?

http://en.wikipedia.org/wiki/Gross_domestic_product
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WhiskeyGirl
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« Reply #1 on: January 29, 2010, 05:20:02 PM »

"GROSS DOMESTIC PRODUCT:  FOURTH QUARTER 2009 (ADVANCE ESTIMATE)"

Quote
Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 5.7 percent in the fourth quarter of 2009, (that is, from the third quarter to the fourth quarter), according to the "advance" estimate released by the Bureau of Economic Analysis.  In the third quarter, real GDP increased 2.2 percent.

      The Bureau emphasized that the fourth-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see the box on page 4).  The "second" estimate for the fourth quarter, based on more complete data, will be released on February 26, 2010.

http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm

What will the revisions show when complete data is received in February 2010?

What is missing from this current estimate?
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WhiskeyGirl
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« Reply #2 on: January 29, 2010, 05:29:08 PM »

Quote
How do the GDP accounts treat the Federal Reserve banks?

Federal Reserve banks are included in the financial corporate sector in the GDP accounts. The profits of the Federal Reserve banks (mostly interest receipts) are shown separately in the profits before taxes of financial corporations. After paying their expenses, the Federal Reserve banks turn the rest of their earnings over to the Treasury; these payments are reported in the GDP accounts as corporate tax payments.

Financial transactions, such as loans and purchases or sales of financial securities by Federal Reserve banks are not recorded in the GDP accounts, but are recorded in the Federal Reserve Board’s flow of funds accounts. These financial transactions are not directly counted in GDP because they involve the exchange of financial claims and liabilities rather than current income or production. Capital gains or losses related to transactions involving financial securities are also outside the scope of the GDP accounts because they represent a change in the value of an existing asset rather than income from current production. However, the holding of financial securities by Federal Reserve banks results in the receipt of interest and dividends, which are included in their net earnings. Therefore, a reduction in the receipt of interest and dividends by the Federal Reserve banks would lower their profits.

For more information on the treatment of federal financial interventions in the GDP accounts, see the FAQ: “How do federal financial interventions, such as the Emergency Economic Stabilization Act of 2008, affect the GDP accounts?”

For information on government sponsored enterprises (GSEs), please see the FAQ: “Where do GSEs, like Fannie Mae and Freddie Mac, appear in the GDP accounts?”

http://faq.bea.gov/cgi-bin/bea.cfg/php/enduser/std_adp.php?p_faqid=510

Didn't the Federal Reserve have record profits?  Anyone know how they 'made' that money?
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It doesn't do any good to hate anyone,
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WhiskeyGirl
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« Reply #3 on: January 29, 2010, 05:35:51 PM »

Quote
How do federal financial interventions, such as the Emergency Economic Stabilization Act of 2008, affect the national accounts?

...

Beginning in late 2008, the federal government has provided capital in exchange for financial assets at more favorable terms than were available in the private markets.  Although purchases of financial assets are not recorded in the national accounts, consistent with the recommendations in the newly updated international guidelines, System of National Accounts 2008, BEA will record a portion of this type of transaction as a capital transfer, calculated as the difference between the actual price paid for the financial asset and an estimate of its market value.  In most cases, BEA’s estimate of this capital transfer will be based on Congressional Budget Office estimates, which are prepared on a net present value basis.  The recording of a capital transfer in the national accounts does not affect GDP or net government saving, but will reduce net government lending or borrowing.   

Administrative costs: Administrative costs incurred by general government agencies associated with implementing financial interventions are included in GDP and are classified as federal consumption expenditures.


more here - http://faq.bea.gov/cgi-bin/bea.cfg/php/enduser/std_adp.php?p_faqid=506&p_created=1224863862&p_sid=gqBw5epj&p_accessibility=0&p_redirect=&p_lva=&p_sp=cF9zcmNoPTEmcF9zb3J0X2J5PSZwX2dyaWRzb3J0PSZwX3Jvd19jbnQ9MiwyJnBfcHJvZHM9JnBfY2F0cz0wJnBfcHY9JnBfY3Y9JnBfc2VhcmNoX3R5cGU9YW5zd2Vycy5zZWFyY2hfZXgmcF9wYWdlPTEmcF9zZWFyY2hfdGV4dD1Ib3cgZG8gZmVkZXJhbCBmaW5hbmNpYWwgaW50ZXJ2ZW50aW9ucywgc3VjaCBhcyB0aGUgRW1lcmdlbmN5IEVjb25vbWljIFN0YWJpbGl6YXRpb24gQWN0IG9mIDIwMDgsIGFmZmVjdCB0aGUgR0RQIGFjY291bnRzPw**&p_li=&p_topview=1

Are CZARs and all of Obama's new government programs adding to the GDP?

Who made up the new standards?  An Obama special interest?
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WhiskeyGirl
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« Reply #4 on: January 29, 2010, 05:38:58 PM »

"Where do GSEs, like Fannie Mae and Freddie Mac, appear in the GDP accounts?

Quote
GSEs
Government-sponsored enterprises (GSEs) are private companies that were established and chartered by the federal government. (GSEs are different from government enterprises, such as the U.S. Postal Service and local transit agencies, which are businesses owned and operated by government.) In the GDP accounts, government-sponsored enterprises are treated as financial corporations in the business sector. Their value added is recorded in the business sector, and their profits (or losses) are included in corporate profits. Government-sponsored enterprises include the following companies: the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), Federal Home Loan banks, Federal Farm Credit banks, and the Federal Agricultural Mortgage Corporation (Farmer Mac).

Conservatorship
On September 7, 2008, the Federal Housing Finance Agency (an agency of the federal government) placed Fannie Mae and Freddie Mac under its conservatorship and the U.S. Treasury acquired preferred stock in each company. At present, however, the GDP accounts continue to classify these two government-sponsored enterprises as private financial corporations.

http://faq.bea.gov/cgi-bin/bea.cfg/php/enduser/std_adp.php?p_faqid=508&p_created=1224865747&p_sid=gqBw5epj&p_accessibility=0&p_redirect=&p_lva=506&p_sp=cF9zcmNoPTEmcF9zb3J0X2J5PSZwX2dyaWRzb3J0PSZwX3Jvd19jbnQ9MiwyJnBfcHJvZHM9JnBfY2F0cz0wJnBfcHY9JnBfY3Y9JnBfc2VhcmNoX3R5cGU9YW5zd2Vycy5zZWFyY2hfZXgmcF9wYWdlPTEmcF9zZWFyY2hfdGV4dD1XaGVyZSBkbyBHU0VzLCBsaWtlIEZhbm5pZSBNYWUgYW5kIEZyZWRkaWUgTWFjLCBhcHBlYXIgaW4gdGhlIEdEUCBhY2NvdW50cz8*&p_li=&p_topview=1

If their losses were not ready, or were missing for the preliminary estimate, would the GDP be less?
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All my posts are just my humble opinions.  Please take with a grain of salt.  Smile

It doesn't do any good to hate anyone,
they'll end up in your family anyway...
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