Kevin Bae

Non-Social in a Socially Networked World

Question: What does an inflation adjusted 4.9% increase in GDP mean?

This is an honest question. It’s reported the GDP number is inflation adjusted. But the inflation numbers don’t include things like food and energy. GDP is the measure of all final goods and services produced in a time period. I take that to mean GDP includes food and fuel. How can we reconcile the true GDP number?

To make this more muddy the inflation numbers were worse than expected. The Personal Consumption Expenditures Price Index (PCE) rose to 3.5% from 2.7%. Food and energy prices continue to rise and are remaining sticky.

I wish financial reporting was less opaque. Government numbers are massaged and can’t be trusted and good reporting could clear this up.

U.S. Economy Grew at 4.9% Rate This Summer, Powered by Fast-Spending Americans – WSJ (no paywall)