GDP surprised on the upside at 2.8% q/q AR vs. Bloomberg consensus 2.0%. One purported financial adviser writes:
2.8% Fake GDP is number are reported by biased govt agencies. What a sham…..believe nothing question everything. Does anyone believe economy is same now as it was 6 yrs ago?
I’ll note that GDPNow was at 2.6% on the day before the release, as was Goldman Sachs tracking. Here’s a picture of GDP in levels, versus nowcasts and forecasts.
Figure 1: GDP as reported (bold black), Bloomberg consensus (pink triangle), GDPNow as of 7/24 (teal square), and WSJ mean survey (blue), all in bn.Ch.2017$, SAAR. Source: BEA 2024Q2 advance, Atlanta Fed, Bloomberg, WSJ, and author’s calculations.
Hence insofar as the growth rate is concerned, advance GDP was only slightly above GDPNow. 2.8% does seem far above the Bloomberg consensus, but it’s important to remember that the advance release is just that — advance, with lots of forecasted components. The standard error of revisions going from advance to third release is 0.5 ppts (the standard error from advance to final is 1.2 ppts, which is part of the reason why NBER does not place primary importance on GDP).
As an aside, 2.8% is still less than the 3.4% forecasted by the irrepressible James F. Smith in the WSJ July survey, (almost) always the leader of the pack.
In one respect, skeptics might have some reason to question — not the motives but the accuracy — of estimated GDP, insofar as alternative indicators suggest lower levels of economic activity.
Figure 2: GDP (bold black), GDO (tan), GDP+ (green), all in bn.Ch2017$ SAAR. GDI for 2024Q2 calculated by predicting 2024Q2 net operating surplus using GDP, lagged surplus, lagged differenced surplus, 2021Q1-2024Q1. GDP+ level calculated iterating growth rates on 2019Q4 GDP level. Source: BEA 2024Q2 advance release, Philadelphia Fed, and author’s calculations.
In 2024Q1, reported GDP is 1.1% above GDO.
This Leonard Brecken clown has a LinkedIn page where he says all sorts of stupid things. Maybe this clown wants to be a guest on Faux News who also similar things as this.
Maybe he should read the excellent post by Dr. Hamilton who captured this BEA release quite well.
I read a few of his other tweets including a rather racist stop the steal one. This dude is certainly a MAGA moron.
Oh my – this clown has decided that if Eastman Chemicals is struggling then it is not possible for the rest of the economy to be going well. Like – can he actually be dumber than Bruce Hall? And who would be stupid enough to rely on this MAGA moron for investment advice?
https://jabberwocking.com/raw-data-the-biden-factory-building-boom/
The Biden factory building boom sets a new record
Interesting post from Kevin Drum on how investment in factories has risen under Biden even though it fell under Trump. Strong performance in 2024QII which is one reason what overall real GDP growth was strong. Something this MAGA twitter clown and Faux News will not tell you.
https://www.bea.gov/news/2024/personal-income-and-outlays-june-2024
BEA reports that PCE inflation remains very low. Expect Faux News to call out the BEA for being lying Marxists!
Stephen Moore was on Faux News telling their gullible viewers that the reason real GDP has been growing is not because consumption or investment is growing but because of overwhelming increases in government purchases. I went back to Dr. Hamilton’s post and this is not what he said. I went to the BEA tables and that is not the message I get from that.
So a favor please? A new post on the sources of real income growth might be in order. I’d like to see whether the esteemed Mr. Moore has a point.
https://fred.stlouisfed.org/series/GCEC1
Real Government Consumption Expenditures and Gross Investment
FRED makes this so easy. Notice real government purchases rose quite a bit during the Trump years – something Trump toadie Stephen Moore never complains about. Under Biden real government purchases have not risen nearly as much.
Look I get Stephen Moore is paid to lie. But come on dude – your lies are so easily refuted.
Like much of what leaks out of the right-wing echo chamber, false claims about biased economic data work toward a breakdown of society. We see the same thing when it comes to science – scientific findings are attacked when they don’t fit a political agenda.
For many, politics has become the filter through which every aspect of public life is seen. The result is that politics becomes the basis for every judgement. We didn’t ask politicians how to beat polio. We didn’t ask politicians how to use pilings to build cities on swampy coastal land. We didn’t ask politicians how to make pinot gris. For a very long time, we didn’t ask politicians how to teach reading and math. Western society shared large areas of agreement, and that extensive agreement promoted social cohesion and social progress. More people voted. More people were educated. More people has access to health care. Fewer people lived in poverty. We undertook great projects.
Lying about science, lying about economic data and the institutions which report the data, questioning the motives of poll workers and teachers, these actions tear at the foundation on our culture. The narrow self-interest of some is making governance and coordination of societal action harder.
Economics has an analogous concept – market failure. In theory, policy intervention, intervention from outside the market, is available to correct market failure. There is no external mechanism to correct the self-interested attacks on institutions. In the case of our politics and culture, self-correction is required, and our political ills are in large measure a deterioration in self-correcting mechanisms. When we treat each other as enemies, when a growing number of us reflexively claim someone has lied when the facts don’t suit our agenda, the mechanism to correct our political ills breaks down.
Trump is, of course, the poster child for political failure. He didn’t win a majority of the vote, but became president. He refused to comply with established standards of behavior as a presidential candidate (release tax filings) or as president (business in blind trust, no self-dealing) without consequence. He committed fraud, rape, theft, obstruction of justice and election interference and has won the overwhelming support of one of our two main parties. He is not, however, the source of the problem – back me up here, Moses. People like Leonard Brecken are the source o the problem. Trump would never have been more than a two-bit tax cheat if not for multitudes of Leonard Breckens.
In a democracy, voting is the final defense against political and institutional failure. Voting is itself under attack. Hard to see how we turn this around without a lot more votes than we seem likely to get. We can be like Venezuela.
Excellent piece.
I would add that the beginning of this was when powerful interests (Murdoch and his types) decided that since the fact-based information process sometimes produced outcomes that they didn’t like – they needed to destroy the pillars of it, by peddling false narratives. Science and journalism was not just getting things wrong every now and then (as is true), but nothing from them could be trusted because they were part of a conspiracy with evil motives (which is absurdly false). The natural paranoia and distrust of authorities embedded in our national character, lend itself easily to such false narratives. They then replaced true information from experts with lies and distortions from false prophets like Hannity and Trump – conmen who could say a lie with sufficient convictions that regular people would think it “must be true”. For people who have little training in collection and sorting of information it all comes down to “gut feeling” – and these conmen know exactly how to speak to and manipulate such “gut feelings”.
The problem is that there is indeed truth and facts for every question. Decisions made based on those facts will be much more likely to produce the desired outcome, that those made on false information and self-interest of rich people and ideologies. The facts can be difficult to finds and nobody gets it right every time. However, the scientific process, conducted by knowledgable experts, is much more likely to get it right than “gut feeling” or self interests of rich conmen.
If I offered you an investment approach that got it right 6 our of 10 times or one that got it right 4 out of 10 times, you would not hesitate to go with the highest probability. Yet a lot of people will take Fox news over real journalism every time.