“While many economists say the 0.1 percent decline in the fourth-quarter gross domestic product (GDP) isn’t as bad as it looks, financial commentator Robert Wiedemer, best-selling author of “Aftershock,” says the number is actually worse than it looks.
That’s because the government only adjusts GDP numbers by an annual inflation rate of 0.6 percent, even though the Consumer Price Index rose 1.7 percent last year, he tells Newsmax TV in an exclusive interview. And given the slim magnitude of GDP change, the inflation number makes a big difference.
“I think this number could actually be significantly worse than what the government is saying,” Wiedemer notes. While government spending, particularly defense, was blamed for much of the slip, Wiedemer says it’s really just the vagaries of how the government measures its spending….”
If you enjoy the content at iBankCoin, please follow us on Twitter
More nonsense meant to misinform.
To use the CPI index rather than the GDP deflator to determine real changes in GDP would reduce accuracy, because the goods and services that make up the CPI basket are different from the goods and services that make up GDP.
Why would someone argue for the application of a clearly inferior measure?
An analogous argument in business terms would be to suggest that a business consider only changes in the cost of materials to determine changes in the cost of goods sold and to ignore the impact of such factors as changes in product mix and changes in depreciation.