Economics Statistics in an Alternative Universe

Suppose I told you about a wonderful country where :

–Domestic production of goods is at an all-time high.
–Domestic production of services is an all-time high.
–10-year productivity growth is nearly at the highest level in 40 years.
–Workers are one-third more productive than a decade ago.
–Exports have expanded over the four years of the crisis, while imports have shrunk.
–Exports have grown much faster over the past decade than imports.

Seems like a pipe dream, doesn’t it? Wouldn’t you like to live in that country?

But wait! You can live in that country…..(see below)


In fact, many of you already do…..because these are the official economic statistics for the good old United States of America.

The official GDP and productivity statistics tell the story of a country that has already shaken off the dust of the recession, where exports are booming, where workers have shown spectacular productivity gains.

Sure does seems different than the economy most of  us live in, doesn’t?

Makes you wonder if these numbers come from an alternative universe, where the U.S. is prosperous and economically healthy.

Let’s go to the official charts:

Stat #1:  The gross domestic product of goods officially hit a new high in real terms in the first quarter of 2010.  (Note: There are other ways to calculate goods output, but this one flows right out of the GDP statistics).

Stat #2: The real gross domestic product of services officially barely dropped during the worst of the bust,  and has resumed its steady climb.

Stat #3: 10-year productivity growth has officially averaged just under 3% a year, despite two recessions.

Stat #4: According to the official statistics, the ‘oughts’ were the best decade for productivity growth since World War II, beating out the 1990s and even the 1960s.

Stat #5: The housing market peaked in early 2006. According to the official statistics, real exports have risen by 14% since 2006Q1, while real imports have fallen by 8%.

Stat#6. Real exports have officially risen faster than real imports over the past decade (starting with 00Q1)

Like I said, an alternative universe.

Added: Tyler Cowen draws a bigger conclusion from these charts

1. The fundamental cause of the financial crisis has been people and institutions thinking they are more wealthy than they are; this spread to Europe as well and now we are seeing the comeuppance.

I’m going to return to this point…it’s absolutely essential

Comments

  1. Mike Allen says:

    Finally, someone is asking the obvious questions, but what’s your conclusion? Is the government lying? What if they are? What good is it to have all these nice numbers if so many talented people I know are unable to find meaningful work for such an incredibly long period of time?

  2. Seymour Skinner says:

    Do you have time to calculate per-capita GDP before this high school Economics report is due?

  3. Nicolas says:

    I remember seeing somewhere that *both* consumer spending and saving levels are officially rising…

    Agree with Mike, what does that mean?
    1) is someone cooking the books?
    2) the methodologies are flawed and we are misestimating things (e.g., CPI understates real inflation therefore overstates real exports that are more prone to high inflation due to mix – btw, I am making those up, I am not the real economist of the crowd). That might be tantamount to 1)
    3) There is again some bubble somewhere that’s pushing this up and will eventually deflate
    4) Any other ideas?

    Thanks for the post, very useful
    Nicolas

  4. These statistics make sense. Workers are more productive because we’ve fired most of the chaff. Retail, for example, was insanely overbuilt. Makes intuitive sense that reducing our fixed retail base would actually create an increase in productivity. At least in the Northeast I also don’t see very much unemployment among skilled workers, the economy seems healthier than it did in 2002. Restaurants are booming, planes are full, housing prices are climbing. If I didn’t read in the paper about the recession I would never notice it.

  5. At a high level, in aggregate, indeed gains are being made. The problem is wealth concentration.

    If 24% of all corporate profits (what other profits are there, since governments and non-profits have none?) go to the top 1% of earners, that essentially means that the other 99% of earners only get to participate in 3/4ths of any profits in name.

    Time for more progressive taxation. I am not talking about taxing small business, I am talking about the 1-percenters.

    If productivity just reached a 6% annual clip, then shouldn’t all workers be entitled to a six percent raise? They do the work, do they not? It was THEIR productivity that increased. That is different from ROI, which includes capital and the owners of capital. Productivity comes from workers, you know, the ones go to work every day and do the work.

    If people had any brains at all, they would demand such a raise from the paycheck signers. Or, they need to extract their earned gains in the form of corporate taxes, reimbursed directly in the form of a tax rebate.

  6. J D, your 24% of all corporate profits is complete fallacy. Take a look at these numbers for ExxonMobil, the most profitable company in the world.

    BREAKDOWN

    % of Shares Held by All Insider and 5% Owners: 0%
    % of Shares Held by Institutional & Mutual Fund Owners: 49%
    % of Float Held by Institutional & Mutual Fund Owners: 49%
    Number of Institutions Holding Shares: 1671

    TOP INSTITUTIONAL HOLDERS

    Holder Shares % Out Value* Reported
    STATE STREET CORPORATION 179,651,376 3.81 $12,250,427,329 31-Dec-09
    VANGUARD GROUP, INC. (THE) 164,564,909 3.49 $11,221,681,144 31-Dec-09
    BlackRock Institutional Trust Company, N.A. 140,694,825 2.98 $9,593,980,116 31-Dec-09
    Bank of New York Mellon Corporation 72,948,235 1.55 $4,974,340,144 31-Dec-09
    NORTHERN TRUST CORPORATION 64,877,574 1.37 $4,424,001,771 31-Dec-09
    BANK OF AMERICA CORPORATION 61,954,321 1.31 $4,224,665,148 31-Dec-09
    JP MORGAN CHASE & COMPANY 55,652,074 1.18 $3,794,914,926 31-Dec-09
    WELLINGTON MANAGEMENT COMPANY, LLP 48,186,844 1.02 $3,285,860,892 31-Dec-09
    BlackRock Fund Advisors 39,132,153 .83 $2,668,421,513 31-Dec-09
    PRICE (T.ROWE) ASSOCIATES INC 38,741,684 .82 $2,641,795,431 31-Dec-09

    TOP MUTUAL FUND HOLDERS

    Holder Shares % Out Value* Reported
    VANGUARD TOTAL STOCK MARKET INDEX FUND 46,340,813 .98 $3,179,443,179 30-Sep-09
    VANGUARD 500 INDEX FUND 44,602,785 .94 $3,041,463,909 31-Dec-09
    SPDR TRUST SERIES 1 36,868,217 .78 $2,529,528,368 30-Sep-09
    VANGUARD INSTITUTIONAL INDEX FUND-INSTITUTIONAL INDEX FD 32,918,562 .70 $2,244,716,742 31-Dec-09
    COLLEGE RETIREMENT EQUITIES FUND-STOCK ACCOUNT 23,689,025 .50 $1,615,354,614 31-Dec-09
    SPARTAN 500 INDEX FUND 17,166,522 .36 $1,106,039,012 31-Jan-10
    SELECT SECTOR SPDR FUND-ENERGY SELECT 15,106,737 .32 $1,030,128,396 31-Dec-09
    VANGUARD SPECIALIZED-ENERGY FUND 12,560,198 .27 $809,253,557 31-Jan-10
    FRANKLIN CUSTODIAN FUNDS-INCOME FUND 11,000,000 .23 $750,090,000 31-Dec-09
    SPARTAN U.S. EQUITY INDEX FUND 10,798,327 .23 $736,337,918 31-Dec-09

    Notice anything, yep those are prodominately mutual fund, and investment firms that cater to the individual investor. Even the CEO Rex Tillerson’s holdings amount to only $91 million, less than 1% of Vanguard’s holdings… So while the fact that a large percentage of corporate holdings are held by a few institutions, those institutional holdings in turn are prodominately held by the 99% in mutual funds, 401K and other investments.

    • CompEng says:

      But if you have learned anything from listening to Goldman execs talk, it’s that investment vehicles are in many respects “owned” by the stewards of the vehicles, not by the investors.

  7. Growth at an all time high? So is DEBT. The growth is coming from the increased debt we are getting into. This whole story is a one-sided, phony view.

  8. Rebecca Burlingame says:

    What is interesting about all this is that, while economies the world over keep moving along, the big differences between yesterday and tomorrow can’t really be seen in the numbers and statistics. The individual who falls out of money economies on a daily basis is not really being seen or measured. Yet this individual still has responsibilities to himself and to others, that have to be met ultimately in new ways.

  9. It appears that the goods and services upticks are just about equal to the stimulus spent thus far.

  10. Those stats may not be too far off. Do you see much of an impact from this crisis in the real world around you? I know I don’t. I only know one person who lost a job because of it, and he’s already gotten a new one. I haven’t noticed many businesses closing around here either.

    This crisis is scary not because of anything that’s happened in it so far but because of what it may lead to in the future. The debt problem will eventually have to be “solved” either through default or through hyper-inflation. THAT’s scary. After either of those “solutions”, no one will lend any more money to the US government, so it will have to cut Social Security, Medicare, etc., and lay off a huge percentage of its workforce. This may lead to unrest. THAT’s scary.

    The changes in GDP, unemployment rate, etc. that have happened so far were pedestrian. They may well be in line with government statistics. The rise in productivity is simply a consequence of technological progress.

  11. The other day, while I was at work, my cousin stole my
    apple ipad and tested to see if it can survive a thirty foot drop, just so she can be a youtube sensation.
    My iPad is now broken and she has 83 views. I know this is
    totally off topic but I had to share it with someone!

  12. From these, we’re able to locate fairly easily out our desired the
    one which could give to us necessary supports.
    GMC’s called their version of the mid-size SUV the GMC S15 Jimmy, but truck lovers realize
    it simply and affectionately because the Jimmy. For organization
    proprietors who’re trying to find a new (or used) forklift for
    place, as well as adequately operate their business, ensuring which you discover the
    lowest priced priced can be a forklifts available for purchase case of
    getting your time and effort to search around, and to create comparisons together with the best forklift retailers locally,
    so as to know you are making the correct selection if you are ready to buy.
    This is really a notable financial program with the
    company driver or perhaps the unemployed driver seeking
    monetary security. When you need to pick one up these classic trucks available for purchase,
    you would like to primarily appear online, here certainly are a number of
    choices:.

Trackbacks

  1. […] Cowen: 1. The fundamental cause of the financial crisis has been people and institutions thinking they are more wealthy than they are; this spread to Europe as well and now we are seeing the […]

  2. […] Mandel points out that there is something mighty funny about official US economic statistics. […]

  3. […] Excerpt from:  Economics Statistics in an Alternative Universe « Mandel on … […]

  4. […] The fundamental cause of the financial crisis has been people and institutions thinking they are more wealthy than they are; this spread to Europe as well and now we are seeing the […]

  5. […] Tyler Cowen says, “The fundamental cause of the financial crisis has been people and institutions thinking they are more wealthy than they are; this spread to Europe as well and now we are seeing the comeuppance.”  To which I’d […]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Archives

%d bloggers like this: