GDP, and Guesses about GDI, GDO

We don’t have estimates of GDI, but if we assume nominal net operating surpluses remain constant at 2022Q3 levels ($6.2 trn out of $26 trn GDI SAAR), then we have the following picture.

Figure 1: GDP (black), GDPNow of 2/16 (light green square), GDI (blue), with estimate for Q4, GDO (sky blue), with estimate for Q4, GDP+ (pink), all in billions Ch.2012$ SAAR. 2022Q4 GDO based on GDI where net operating surplus set to equal 2021Q3 value. GDP+ level calculated by iterating growth rates on 2019Q4 actual GDP. Source: BEA, 2022Q4 advance, Atlanta FedPhiladelphia Fed, and author’s calculations.


42 thoughts on “GDP, and Guesses about GDI, GDO

  1. pgl

    Did Florida appoint Bruce Hall as its surgeon general?

    The Florida Department of Health’s inspector general last fall investigated Joseph Ladapo, the state’s surgeon general, after the agency received an anonymous complaint alleging he falsified a report focusing on the safety of Covid-19 vaccines for young men. Among other things, the complainant alleged Ladapo committed “scientific fraud” and “manipulated data” in a report that Ladapo later used to claim that the Pfizer-BioNTech and Moderna Covid-19 vaccines could increase the risk of cardiac death among young men, according to the complaint. Both brands use mRNA technology, which Ladapo contends was rushed to the market by the urgency of the pandemic without the proper testing. Among other things, the complainant alleged Ladapo committed “scientific fraud” and “manipulated data” in a report that Ladapo later used to claim that the Pfizer-BioNTech and Moderna Covid-19 vaccines could increase the risk of cardiac death among young men, according to the complaint. Both brands use mRNA technology, which Ladapo contends was rushed to the market by the urgency of the pandemic without the proper testing.

    1. Ivan

      I would say that Florida and Ladapo are looking at a multi-billion dollar lawsuit from the big pockets of big pharma. You cannot just smear a product with lies and expect the company to just take it on the chin.

        1. Ivan

          I would love to be part of the discovery process in the lawsuit from people who lost loved ones do to this misinformation campaign. They would not be nearly as gentle as a drug company. The revelations about political pressures to withhold the truths and conjure up lies could be enough to topple DeSantis just about in time of the next election. We just have to time this right. First let him become the candidate, then get it all out there.

  2. Macroduck

    That odd dispersion of forecasts is still there. Atlanta Fed’s response to ISM non-factory data and auto sale, released on February 2, was to mark up the GDPNow estimate from 0.7% to 2.1%. At that time, the median Blue Chip estimate was for a slight decline in Q1 GDP. I had assumed Blue Chip hadn’t updated their median estimate yet. However, nearly 3 weeks have passed and the Blue Chip median (as reflected on the GDPNow page) is still for a slight decline in GDP.

    Either I should stop paying any attention to the Blue Chip information on the GDPNow page or something fishy is going on in the forecasting world. Meanwhile, the latest Philly Fed survey of professionals has modest growth:

  3. Macroduck

    Off topic, the Fed and climate change –

    We all recall the outrage manufactured by certain members of Congress because the Fed has begun to take climate risks into account in stress-testing financial institutions?

    For those new to the issue, the Fed has a financial stability mandate. Any risk to financial stability falls within the Fed’s regulatory domain. If loans are mispriced because of unrecognized risks, that is a risk to financial stability. Here are a couple of links to new research suggesting a roughly $200 billion overvaluation of real estate because of unrecognized flood risk:

    That’s just flood risk. Fire, wind and – increasingly – drought all represent risks to property value. This is a problem for loan value. It is also a problem for insurance. So good for the Fed for looking into this risk, and for risking political backlash from politicians beholden to the oil, gas, coal, auto and utility industries. Wait…did I mention the construction industry…and tires…and cattle people…?

    1. Ivan

      “All together, they add up to $115 billion this year, according to estimates by the official Joint Committee on Taxation and also the nonpartisan Tax Policy Center — a big change compared to how much big companies usually pay. Last year, corporate taxes totaled $425 billion”

      Companies only paid $425 billion in taxes last year. I wonder how much they spend on stock buybacks? Obviously they will be pushed into a death spiral if they are asked to pay another $115 billion to the society that has raised, protected and pampered them through this and all the previous temper tantrum’s.

        1. Ivan

          So they are complaining about increased taxes that amounts to less than 10% of what they spend on stock buybacks. Well cry me a river tryst fund babies.

  4. AS

    Today the FED got more incentive to raise rates. Both PCE All and PCE Core increased significantly along with prior month upward adjustments.

    PCE all (FRED series, PCEPI) increased at a monthly rate of 0.62%, annualized at 7.7%. The six-month average annualized rate is 4.1%.

    PCE Core (FRED series, PCEPILFE) increased at a monthly rate of 0.57%, annualized at 7.1%. The six- month average annualized rate is 5.1%.

    Still working on the instantons rate, so we need expert help to calculate the instantaneous rates.

    Monthly Percent Change

    Compounded Annual Rate of Change

    1. Macroduck

      I’m curious how uch of the revision is due to new seasonal factors and what the January readings would be under old seasonal.

      What seasonals giveth (un January), seasonals taketh away ( in other months).

      1. AS

        I found the three latest versions of PCEPI & PCEPILFE on ALFRED and it does not look like there were any changes in seasonal factors. Not certain if the data will be displayed properly. PCEPI shown below.

        Date********12/23/2022 *****1/27/2023 ****2/24/2023
        2021-01-01 *******112.583 ******112.583 ******112.583
        2021-02-01 *******112.961 ******112.961 ******112.961
        2021-03-01 *******113.632 ******113.632 ******113.632
        2021-04-01 *******114.238 ******114.238 ******114.238
        2021-05-01 *******114.819 ******114.819 ******114.819
        2021-06-01 *******115.458 ******115.458 ******115.458
        2021-07-01 *******115.986 ******115.986 ******115.986
        2021-08-01 *******116.444 ******116.444 ******116.444
        2021-09-01 *******116.808 ******116.808 ******116.808
        2021-10-01 *******117.479 ******117.479 ******117.479
        2021-11-01 *******118.200 ******118.200 ******118.200
        2021-12-01 *******118.841 ******118.841 ******118.841
        2022-01-01 *******119.469 ******119.469 ******119.469
        2022-02-01 *******120.178 ******120.178 ******120.178
        2022-03-01 *******121.321 ******121.321 ******121.321
        2022-04-01 *******121.563 ******121.563 ******121.563
        2022-05-01 *******122.300 ******122.300 ******122.300
        2022-06-01 *******123.512 ******123.512 ******123.512
        2022-07-01 *******123.397 ******123.397 ******123.397
        2022-08-01 *******123.728 ******123.728 ******123.728
        2022-09-01 *******124.154 ******124.154 ******124.154
        2022-10-01 *******124.617 ******124.623 ******124.666
        2022-11-01 *******124.747 ******124.744 ******124.873
        2022-12-01 *****************124.809 ******125.124
        2023-01-01 *****************************125.899


      No they didn’t. .4 of that is from last year. They move it into January to balance the books. The rest is energy and lagging housing data which is about to……crash.

    1. pgl

      I’m bringing to think you pray each morning for World War III to start. I can only imagine the reason you pray for this as it would get you more appearances with your racist friends on Fox and Friends.

    2. Steven Kopits

      If China supplies weapons to Moscow, then the US will be forced to respond with sanctions, and then rinse and repeat. The path to war, and in war, is a series of one-way turnstiles. Once you’ve passed through, you can’t come back. If China provides weapons to Moscow and the US sanctions China, which it will, then China can’t afford to back down and cave to US pressure. So it creates a ratchet.

      1. pgl

        ‘rinse and repeat’ is a nice description of your usual bloviating. Come on admit it – you are praying for World War III.

        1. Steven Kopits

          Well, I don’t see many good scenarios coming out of a war with China. At the same time, I can appreciate that Xi & Co are frustrated. They have this fantastic country, 1.4 bn people, plenty of fire power, and yet are struggling for traction even in the South China Sea. As I have stated before, Xi’s objective function differs from that of China. Xi wants to be the Big Dog. For him, Scary China is fine. That of course scares the daylights out of every other country in the world, so no one likes China (okay, Iran, Syria, Eritrea, Laos and North Korea). (Let’s not include Russia among China’s friends. Russia is a friend of convenience, not conviction, for Russia.)

          By contrast, China as a country is doing just fine. No country ever has benefitted at scale from inclusion in a rules-based order as much as China has. China has time on its side, and has to do only three things to become, in effect, the global hegemon:

          1. continue to show up for work
          2. internalize the motto, “How can we help you?” and
          3. become a democracy (to ensure commitment to individual property rights).

          That’s it. For Xi, that’s not good, because he thinks being the hegemon means being able to order people around, rather than operating a global, rules based order. In other words, his power is curtailed — and must be curtailed — in order for China to become a true hegemon.

          The question for this decade, and perhaps the one looming over the next century or more, is whether China can be safely integrated into the global community. Does the global community trust China?

          Right now, the answer to that is ‘no’. If China starts WWIII, as appears quite likely, the answer is likely to remain ‘no’ for many decades to come.

          1. Moses Herzog

            @ BlueStatesResidentKopits
            No update on when China becomes a democracy?? Am I remembering correctly your last update that China would be a democracy before the year 3010?? I mean if you can keep your prediction time frame inside 100 years interval I’m sure people are going to be amazed with The Kopits foresight.

            Also Kopits, is it true that you said that if owners of large companies who employ illegal immigrants were denied eating pudding for dessert for a full week we could finally put an end to the hiring of illegals in the USA?? Or was it that you said denying dessert pudding for a full week to wealthy white men who employ illegals was too severe?? I don’t wanna misquote your feelings about how showing love and empathy to wealthy white men who employ illegals is the proper way to eliminate “dirty brown people” from raping and murdering all across Cape Cod. Let me know what parts above I misquote you on Kopits, because I think I must be remembering all of that wrong, or some part, surely.

            I think you must have been misquoted before. The following quote is attributed to you by baseball guru Paul Bedard of the Washington Examiner and it is so beyond imaginably DUMB, I think they must have misquoted you. Did you want to correct the record CapeCodKopits??
            “Under the plan drawn up by immigration analyst Steven Kopits of Princeton Policy Advisors, immigrants would pay $9,000 for an FBI background check and a visa that would allow them to work for 365 days. Besides a windfall of billions of dollars in visa fees, likely over $100 billion, Kopits said his plan would effectively close the border to the millions of people whom Border Patrol agents now encounter at checkpoints as they look for a free pass in.”

            Gosh, just to ponder….. for…… a few moments…… if only anyone else had thought of asking for $9,000 from people escaping murderous conditions of their home countries for the right to a single year work pass to America, we could have solved this influx of illegals from Mexico and Central America probably a decade ago. Why hasn’t Kopits got like, a MacArthur Genius Grant for this idea yet!?!?!?!? Wow, man, life is crazy. Is it a liberal conspiracy that Kopits did not get a MacArthur Genius Grant for this magic bullet to end illegals’ “crime spree” across Cape Cod and affluent portions of America??? Wow, to witness such genius in our lifetime, and yet no one (Even donald trump took a pass on this!!!!!) adopts this Kopits moment of Einstein level creative power…….. just to be here when Kopits articulated this idea……. what an honor for me……..

      2. Ivan

        The Ukraine war has proven that Russia has nothing to offer China that would be worth even the slightest chance of a trade war with their largest customers (EU and US). What value to China would a military allied be if it couldn’t even beat Ukraine in a war? Russias economy is the size of Spain’s and could not even replace 10% of the loses from trade war with EU/US, even if Russia spend all of its GDP on purchases from China.

        Russia has no strategic value to China in a conflict with the West. Sure Russia could provide cheep fossil fuel for a decade or two, but that doesn’t really come to much in the end. If China saved $100 million per day from cheep sanctioned hydrocarbons – that is $36.5 billion a year – that would be a drop in the bucket for an economy the size of the Chinese.

  5. pgl

    Trump Water handed out in East Palestine seems to be bottles kept in storage for many years:

    OK the water may not have been bottled in 2010 but even this excuse story suggests it was bottled in 2016. Paula Poundstone explains why this matters:

    “The water in the Trump water will not expire, but the plastic bottle will leach chemicals into the water over time,” Paula Poundstone, a stand-up comedian, wrote. “Drinking water of 2-3 years old is not recommended. Trump Water was discontinued in 2010.”

    OK she got the precise date wrong but giving these residents 7 year old bottles of water was an awful thing to do. Of course the real problem was the deregulation of the railroads under Team Trump.

  6. James

    Menzie – I’m not a Fed Board Chair Person but it seems to me that the best way to bring down wage increases would be to bring in more workers – as the U.S. has always done via increased immigration. When do we decide to legislate common sense immigration reform? and Thanks.

    1. pgl

      Hey – the mayor of New York City has suggested we should welcome those immigrants that Texas keeps shipping us to fill all of our job openings.

    2. pgl

      “Federal Reserve officials said inflation is too high and may take time to cool, even as fresh price data came in hotter than expected and new research suggested they may need to raise interest rates as far as 6.5%.”

      One month of somewhat higher prices increases and the inflation hawks start freaking out. And of course Princeton Stevie boy sees a few more American troops are in Taiwan and this nutjob is calling for World War III.

  7. pgl

    Trump used to brag about his deregulation mania but now that it has come back to bite East Palestine, it seems Trump denies all knowledge:

    Buttigieg was referring to Trump’s visit to the East Palestine just one day earlier, where instead of tossing paper towels at de-homed hurricane victims Trump handed out red MAGA caps at a McDonald’s and used “Trump”-branded bottled water ensure voters knew he had been there. During Trump’s Wednesday visit a reporter asked him about the train derailment, which resulted in the release of toxic gases under the direction of GOP Governor Mike DeWine. “I had nothing to do with it,” Trump told a reporter Wednesday who asked about him “pulling back rail regulations” when he was president, something he did indeed do.

    Buttigieg cleverly turned this statement into a call for Trump to work with the Biden Administration to restore the appropriate safety regulations. Something tells me Trump is doing busy consuming Big Macs to do the right thing.

  8. pgl

    I call this the Lawrence Summers flip flop. First he tells us monetary policy has overheated the economy. But now?

    Summers Sees Signals of a Sharp Drop-Off in Economic Activity
    Former Treasury chief says data on current conditions strong
    Leading indicators suggest risk of ‘Wile E. Coyote’ moment

    Wile E. Coyote? OK, if Larry is saying the FED should reverse course on the monetary restraint he advocated, I will not I have been saying this for a long while. What took you so long Larry?

  9. pgl

    Donald Trump Jr. has been a lowlife slime since birth so it is good that people have finally figured this out:

    “You know, Pete has no business in that position,” the 45-year-old told Newsmax’s Carl Higbie. “But, you know, he’s the guy who had no business running for president but they let him do that cause he’s gay and they check off a box and then he didn’t win, so [they said] ‘he’s the gay guy, so we gotta give him something, let’s make him transportation secretary.’ His failure after failure after failure is truly affecting the American people.”“Plus the time he spent chest-feeding while we were in the midst of a supply chain crisis,” Junior added, referring to Buttigieg taking paternity leave in 2021.

    Of course, users couldn’t believe how harsh Trump Jr.’s remarks were. One person wrote, “Don Jr is a horrible human and a total oxygen thief,” while another said, “Jr. calls Sec. Pete unqualified for his job! His old man wasn’t qualified to live in Whitehouse, & wasn’t qualified to be commander in chief of our military! His old man committed TREASON against the country he swore an oath to protect! Sis &hubby were unqualified to be advisers.”

  10. Willie

    Never mind political stuff. That is what it is and we are stuck with charlatans and grandstanders. As always has been and always will be.

    The Ukraine war is going to have some knock on effects. Our maligned military industrial complex has been making lots of things, but as it turns out, not exactly what Ukraine needs. We are finding out how a land war works now, and it requires old technology like artillery shells to go along with the fancier stuff. Those have to be made now, and made in large quantities.

    Another knock-on effect may be relocation of supply chains. The more China supports Putin, the more likely it is that sourcing will diversify out of China. That’s already happening, but my cloudy plastic ball says it will accelerate now. I don’t expect all that manufacturing to land in the US. It will end up in lower cost countries in South East and South Asia, in Latin America, and maybe in Ukraine in time. Africa doesn’t seem as poised to take advantage. I hope I’m wrong about that.

    1. Anonymous

      paradigm among us military since late 1940’s:

      don’t get in a land war in Asia.

      the definition of Asia has moved to the east frontier of Poland.

      Ukraine is nearly as wide as Texas, and has Black Sea ports which can be shut at the Bosporus.

      Trains and planes are too little or too slow.

      Why us plans prior to 1991 was for the soviets to attack and stretch their lines of supply……

      Next China is making that calculus over a near naval/amphib war over Taiwan, again us supply lines are very long.

      If usa serious to fight across huge supply lines a few hundred transport ships are needed

  11. pgl

    Little Brucie Hall loves to attempt to make some point with Dilbert cartoons. I think this explains a lot:

    Scott Adams, creator of the Dilbert comic strip, went on a racist rant this week on his Coffee with Scott Adams online video show, and we will no longer carry his comic strip in The Plain Dealer. This is not a difficult decision.

    Adams said Black people are a hate group, citing a recent Rasmussen survey which, he said, shows nearly half of all Black people do not agree with the phrase “It’s okay to be white.”

    “I would say, based on the current way things are going, the best advice I would give to white people is to get the hell away from Black people,” he says in the video.


    Pce came in at .3%. Elevated by energy. .4 of that was bogus revision based accounting since they don’t go back and adjust those numbers. Same happened in January 2020 when 2019 was revised up. Poor government management.

  13. pgl

    We were noting how real GDP growth might have been less than real GDI growth of late but even using this more conservative estimate – real GDP as so of 2022Q4 was almost 6.7% higher than it was as of 2020Q4. I guess Biden is not doing such an awful job with the economy.

      1. Ivan

        I know, he had to get us out of this huge hole created by the pandemic; and then fight back against the severe hit from the food & oil crisis of Russias attack on Ukraine – and yet against all of that he grew the economy by 6.7% – BEST PRESIDENT EVER !!!

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