From Thursday’s GDP report : US Q1 GDP up $327b in nominal terms.
From the most recent Treasury report: US Q1 Federal Deficit up $555b in nominal terms
Related:
“What part of the GDP is actually government spending”
(Like the government paying people to dig holes and fill them up again. “But hey, at least the hole-diggers will spend the money right?”)
We see (blue line below) total GDP as counted (including gov’t spending)
We see (red line below) GDP of the underlying economy, (private sector only)
Please notice
-
The red line remains below zero, which means the actual private sector economy shrank. It did not grow.
-
This is not normal. This is not normally the way things happens. We cannot (honestly) say “But Gaius, it ahs always been like this, even under Donald Trump.”.
1 Like
And just how much of that government spending is going overseas instead of here?
2 Likes
When the gov’t sends cash money overseas that does not count toward the GDP (and might even count against, (lower) the GDP.
What does count:
-
When the National Park Service spends $333,000 to build an outhouse at Delaware Water Gap National Park (1 below)
-
When the NYC government spends $3.6 million to build a small restroom on a playground. (link 2 below)
-
When Joe Biden drains the Strategic Petroleum Reserves and sells it to China (link 3 below)
etc.
1 Like
Fraud, waste, abuse, but most importantly corruption. Inflated material costs, inflated labor costs, special payouts… And these contracts have to be approved by local politicians.
4 Likes
Well, the more they soend for outhouses the more the economy grows.
A $4 million outhouse provides twice the measured growth as a $2million outhouse.
1 Like
So was a $10,000 dollar hammer.
1 Like
Right!
So obviously, the notion of government spending adding to the GDP is poor at best.
Government builds a bridge to nowhere? The GDP (as calculated) increases.
Government spends $20 for a hammer the GDP increases only $20, but if it spends $10,000 for a hammer, the GDP increases $10,000. Consider also the fact that the government used the hammer only so a man could pound nails in then pull them out again.
I think a more proper way to calculate the actual health of an economy is to calculate the GDP minus the portion of GDP that is government spending.
If we do that, we get the red line below,
and then we see that right now the economy is in a very rare situation. Actual GDP growth is actually negative (below zero)
I am pretty sure that Government spending includes welfare program payments. In economics, those are transfers from one party to another, with no tangible good or service received in exchange. Thus government spending in this way does not represent additional economic activity.
I am 100% positive the GDP does not include those (directly).
However, as Keynes pointed out:
Every time the gov’t taxes or borrows or print a dollar, and hands it out as a welfare payment, a short time later the recipient uses it in a ay that does count toward GDP.
Well when received through taxation, the recipient of the welfare just mimicked the spending that would have occurred had the tax payer kept and spent those funds. Borrowing should be a negative GDP event.
Basically yeah.
(Trying to keep my next comments brief.)
A rich man, every time he gets another dollar spends 40 cents, and saves 60 cents.
Of course both of those “trickle through” the economy with some sort of multiplier, but
a greater portion of the 60 cents winds up as “cash on the sidelines.”
Because “cash on the sidelines” is not counted toward the GDP, then anything central planners do (such as tax the rich and expand welfare programs) to reduce “cash on the sidelines” increases the economy as measure by GDP.
There are a number of flaws with doing things this way, but it is true (to a degree) that
As long as we define everything as either “a” or “b” then we can increase “a” by reducing “b.”
I don’t think the rich keep 60% of a dollar earned in cash. They make investment purchases, measurable as GDP, receiving tangible goods (securities) in exchange.
American taxpayer is being robbbed blind.
Correct, but if you (or a rich man) puts $100 in the bank, the bank lends only $90 and only $90 is spent. So, as long as we count spending and do not count saving, then every time a person saves money the economy shrinks.
Zeno of Elea (490 – c. 430 BC) proposed this as mind candy, (Zeno’s Paradox).
John Maynard Keynes took it literally.
.
.
.
1 Like
I don’t know where you are getting this information but GDP missed estimates by 64%
https://www.newsmax.com/finance/streettalk/gdp-recession-federal-reserve/2024/04/25/id/1162489/
Ushering in the talk of recession once again.
Let’s go Brandon!
In 1964 (the year before they stopped making silver quarters), the minimum wage was $1.25 per hour.
A 1964 silver quarter weighs in at 6.25 grams and is comprised of 90% silver and 10% copper.
5 silver quarters comes out to 28.125 grams (~1oz) of silver and 3.125 grams of copper.
The current market value (4/29/2024 8:00A.M. CST) for one ounce of silver is $27.42.
What’s a copper-nickel-alloy quarter worth these days? 25 cents?
1 Like
I provided my sources
and illustrations from my sources.
The government sent us $555b deeper into debt and created only $327b in “economic growth.”
Yes, as Newsmax wrote, it was a big miss on expectations.
1 Like
Soooooooo.
When the US missed it’s GDP estimate by 64%, how can you claim that the economy is growing?
Math is hard
Example:
Someone estimates growth will be $100.
In fact growth is only $36. (64% lower)
Then some guy on the internet says “How can you claim $36 is more than zero? You must be a liberal! Yargh!!!”
