GDP calculated using "new math" since 2012

Discussion in 'Too Hot for Swamp Gas' started by gatordowneast, Aug 1, 2013.

  1. gatordowneast
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    gatordowneast Well-Known Member

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    I would guess a couple of Obama knee pad wearers, "padded GDP stats" to provide yet another BS stat in support of the regime. One wonders if they revised prior years to reflect these "new thoughts".

    University of Southern Maine professor Barbara Fraumeni and a former colleague have an unprecedented claim to fame: They single-handedly raised the country's gross domestic product by nearly $400 billion in 2012.

    On paper, anyway.
    Fraumeni, a former chief economist for the U.S. Department of Commerce's Bureau of Economic Analysis, and her then-colleague Sumiye Okubo wrote a paper in 2002 that became the basis for a sweeping change in the way the nation's GDP is calculated. That change, and a handful of others, took effect this week.

    The paper by Fraumeni and Okubo, former associate director of industry accounts for the Bureau of Economic Analysis, was published in 2005 and took several years to implement. It argued that business expenditures on research and development should be included in GDP because they represent investments in future revenue generation.

    Fraumeni noted that it took a team of people to add the capitalization of research and development expenditures to the nation's GDP after she left the bureau in July 2005. She is now a professor of public policy and management at USM.

    "To us, it was obvious," she said. "R&D has benefits that stretch out into the future."

    The adjustment, which added $396.7 billion to the nation's gross domestic product in 2012, is part of an effort to make GDP figures more accurate at a time when the U.S. economy is so heavily dependent on knowledge and innovation, Fraumeni said.

    Other changes implemented this week include adding the cost of producing entertainment, such as movies and TV shows, that is expected to generate additional revenue for its creators in the future, such as through syndication and reruns. That adjustment added $74.3 billion to GDP in 2012.

    More of the costs associated with transferring ownership of a home also have been added, such as title insurance and attorney's fees, boosting 2012's GDP by an additional $42.3 billion.

    The final adjustment was to include interest from the unfunded portion of defined-benefit pension programs, which added $12.6 billion to GDP in 2012.

    The changes suggested by Fraumeni and Okubo represent about 70 percent of the value added to GDP in 2012 by all of the new adjustments.


    For her work, Fraumeni received a gold medal for distinguished achievement in the federal service from the Department of Commerce in 2006.

    She said developing and presenting her argument involved long hours and sleepless nights that finally have paid off in a more accurate accounting of the nation's economic progress.

    "Yeah, I'm giving myself a bottle of champagne," she said.




    http://www.pressherald.com/business...-change-in-calculation-of-gdp_2013-08-01.html
  2. oldgator
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    oldgator Premium Member

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    in your language---based on your
  3. gatordowneast
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    gatordowneast Well-Known Member

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    Old, suggest you read before you type. Article is from one of the most liberal newspapers in the country owned by one of Obama's biggest supporters. Take your kneepads off your eyes so you can see and read. Or perhaps you subscribe to the theory of ready, fire, aim.
  4. wgbgator
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    wgbgator Sub-optimal Poster Premium Member

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    No doubt in 2002 when the paper was written, she knew that there would be a Democrat in office in 2012.

    Of course you realize that GDP will be calculated this way in 2016, or 2020 no matter who is president right?
  5. oldgator
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    oldgator Premium Member

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    Either Gatordowneast will disregard the above or find some way to blame Obama for influencing the 2002 article...

    looks like Gatordowneast lakes some of the spin finesse of Breitbart, Fox, etc when it comes to trying to spin stuff. But have to admit that his arguments are just as flawed as Fox, Breitbart, et al
  6. philnotfil
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    philnotfil Well-Known Member

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    When did the change take place? When did the process for making the change get started?
  7. OklahomaGator
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    OklahomaGator Jedi Moderator VIP Member

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    I don't disagree that investments made in R & D should count in the GDP. However, if you are going to adjust the calculation you need to adjust it backwards whenever you are making a comparison to prior periods.
  8. wgbgator
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    wgbgator Sub-optimal Poster Premium Member

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    The proposal was from a 2002 paper. The BEA (like the BLS), who calculates GDP isnt a political appointee agency. They've had the same director since 1995.
  9. mdgator05
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    Which they did all the way back to at least 1929.

    http://www.businessweek.com/articles/2013-07-31/gdp-growth-beats-expectations-remains-soft

  10. GatorBen
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    GatorBen Well-Known Member

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    So we should be mad about the BEA being in the bag for Obama based on a change that was suggested in 2002, the BEA began working to implement in 2005, and gave the proposer an award for in 2006?

    Who knew that the federal government under Bush would be so in the bag that they would set about trying to make things look better for a Democrat 7 years later that they had no way of even knowing would be in office?

    Congratulations, you found an article demonstrating that BEA has implemented a number of changes that have been in the pipeline for nearly a decade, and that this was far and away the largest of those changes. Not sure what it is supposed to prove, but nevertheless, well done!
  11. gatordowneast
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    gatordowneast Well-Known Member

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    The initial paper was published in 2002. There have been numerous studies before and since. Makes no difference when the "idea" originated. When was GDP changed to reflect this information?

    Aren't you guys just a tad curious as to what GDP would have been without these changes?

    Of course you are not. As long as your neighbors, parents, government continues to fund you, you really don't care do you?
  12. gatordowneast
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    gatordowneast Well-Known Member

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    Old, I never read Breitbart or go to the site and do watch Fox so I get some balance. What about you?
  13. gatordowneast
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    gatordowneast Well-Known Member

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    Aren't you curious what GDP would have been comparing apples to apples? That was the point...the measurement of GDP changed. OK, so what did our GDP do without the change? Aren't you curious?
  14. wgbgator
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    wgbgator Sub-optimal Poster Premium Member

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    If this is a more accurate measurement, and they've also revised the historical data using the same method to compare going forward, then no, I'm not curious at all.
  15. 108
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    108 Premium Member

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    this has been in the works for a while now, but im guessing the OP just heard of it
  16. cjgator76
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    cjgator76 Well-Known Member

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  17. gatordowneast
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    gatordowneast Well-Known Member

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    Sorry, call me skeptical but any statistics coming out anytime under this regime are suspect. The media, government employees union, IRS, all seem to be carrying water for this crook.
  18. wgbgator
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    wgbgator Sub-optimal Poster Premium Member

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    Except the bad ones right? :grin:
  19. gatordowneast
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    gatordowneast Well-Known Member

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    Those of us who own and run businesses don't trust any information coming out of this administration. As has been pointed out by other posters...when 9 M people disappear from the workforce and are no longer counted.... When everyone is walking around with big smiles about the stock market when the Fed has been buying $85 B in bonds monthly for 5 years. Yep, count me as a skeptic about EVERYTHING connected to this POTUS. He's been lying his ass off his entire life and the only people not conned are getting checks or are wearing autographed knee pads.
  20. philnotfil
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    philnotfil Well-Known Member

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    In the examples you gave, all of those numbers came directly from the government. The great thing about government numbers is that they tell you where the information came from and what they did with it. Different from when people start making up their own inflation or unemployment numbers to show the "real" inflation rate or unemployment rate.

    Now we can argue about whether or not the information being provided is useful, but the numbers are gathered and compiled in the same way year after year, and any changes take years to put into place and are well-documented.

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