Friday, May 7, 2010

The Laughable Nature of GDP Growth

It's funny, but then again, not so funny.

    Richard Daughty
    LewRockwell.com -

    At work the other day, I was actually considering either doing some actual work or taking the afternoon off, after, of course, I finished reading the government’s Bureau of Economic Analysis release of the news that “Real gross domestic product – the output of goods and services produced by labor and property located in the United States – increased at an annual rate of 3.2 percent in the first quarter of 2010, (that is, from the fourth quarter to the first quarter)” and that last quarter of 2009, “real GDP increased 5.6 percent.”

    My face is simultaneously showing surprise, disbelief and outrage – a rare and thrilling theatrical talent – at this news, and to understand the expression upon my face, think about how if the growth in GDP was 3.2% in one quarter, then that would be an extrapolated annual growth of a blistering 12.8%! Wow! I am surprised! You can see why I am disbelieving, and you can see why I am outraged that anyone would say such a preposterous thing!

    Okay, this is unbelievable and laughable enough, but get a load of this: if you took the 5.6% increase of the previous quarter’s GDP growth and did the same thing, then that would come out to 22.4% growth in GDP! 22.4%! Hahaha!

    This is so ludicrously and humorously preposterous that I actually laughed out loud, and Tom, whose desk is right next to mine, looks over and makes some rude comment like “Mogambo’s looking at porn again!” whereupon everybody else laughs at me.

    So I, in my own defense, say in reply, “No, I was not looking at porn on my computer, you halfwit, which any observer would have known by simply noting that I was laughing, and one does not laugh when looking at porn, and instead one makes, you know, kind of a grunting, panting sound and saying things like ‘ooooOOOOooohhhh!’ Morons!”

    Before they insulted me, I was going to generously show them that merely computing 3.2% of our $14 trillion GDP, we get the $448 billion dollar figure of the quarterly “growth” in GDP, which comes out to roughly $2 trillion per year, which is – surprise! – roughly approximately nearly exactly precisely how much money the federal budget-deficit spending is now pumping into the economy.

    In short, it looks like the entire growth in GDP is due solely to – dollar for dollar! – the deficit-spending by the federal government! Hahaha! “Growth!” Hahahaha!

Read all of it.