Department of Commerce Building, DC
The U.S. had a depressed first-quarter so our government decided to change the way it reports the GDP for a second time. It will be a complete lie based on a fraudulent accounting scheme.
In May of this year, the Bureau of Economic Analysis (BEA) announced they were altering the seasonally adjusted data that is used to calculate economic growth for the second-quarter GDP.
Zerohedge also reported in May that the government was doubling down with a “second seasonal adjustment: one which will take all the bad data, and replace it with nice and sparkly, if totally fake and goalseeked, GDP numbers.”
The new numbers were released today and the GDP increased 2.3% according to Reuters but it’s not real as zerohedge reported.
Reuters wrote: “Consumer spending, which accounts for more than two-thirds of U.S. economic activity, grew at a 2.9 percent rate from a 1.8 percent pace in the first quarter.”
They’re including spending that has nothing to do with real investment dollars. Data manipulation is based on misuse of the concept of “residual seasonality.” The weather for one could be a source of “residual seasonality”.
A study by Federal Reserve Board economists in Washington found no convincing evidence of residual seasonality in recent years.
The Bureau of Economic Analysis (BEA) claims it’s identifying and mitigating potential sources of “residual seasonality” when they adjust the numbers.
In 2013, they adjusted the gross investment number, adding research and development (R&D) spending which shouldn’t be included in the GDP because it’s not an investment worth real dollars and they included art, music, film royalties, books, theatre.
They are using dormant, non-productive activities in the production numbers so people reading books are equivalent to new factories being built. Instead of simply including the Apple iPads for example, they will also include the R&D to make them.
Instead of including pension payouts, it becomes “the promise to pay” in their new accounting scheme.
All of these numbers are arbitrary of course.
Commissions, legal bills and expenditures on real estate transactions are included in GDP as “investment” even though they are obviously not contributing to the GDP and do not translate into real production.
Intangibles are being added to the supposedly real numbers.
No one else in this world is doing this so the U.S. can no longer honestly compare themselves to other countries, the keyword here being “honestly”.
The Financial Times reported that starting from July 2013, U.S. GDP would become 3% bigger due to a change in statistics.
It’s an imaginary 3% increase.
As seeking alpha reported in 2013, “Each dollar of increase in debt doesn’t contribute anymore to an equal amount in GDP growth.”
With all this lying, the growth is still only 2.3% and last quarter it was -.1%.
Now the government can spend even more and continue their habit of lying to the American people and the world.
If Republicans win the presidency in 2016, they immediately need to change this, preferably on the first week in office, and let the world know what this administration has done.
In any case, GDP growth since the recession has come from the Feds creating money. Nothing is real.
Rationale at the Bureau of Economic Analysis
Definition of seasonality: A characteristic of a time series in which the data experiences regular and predictable changes which recur every calendar year. Any predictable change or pattern in a time series that recurs or repeats over a one-year period can be said to be seasonal.