Thursday, August 15, 2013

Outperforming our Potential


Andrew Bartels shows that the 2013 Comprehensive Revision didn't have much effect on RGDP:

Source: Andrew Bartels

I look at it this way:

Graph #2: Real GDP (red) and Potential GDP (blue)
A Tale of 2009 Dollars versus 2005 Dollars
Real GDP after the revision is better than Potential GDP before the revision. Now that's one helluva change!


How much inflation did it take to push real GDP above potential like that?

Graph #3: 2009-Based Deflator Converted Back to 2005=100
Shows Prices Almost 9% Higher by 2009
Between 8 and 9 percent.

Maybe tomorrow they'll revise Potential GDP to the 2009 base.

5 comments:

Jazzbumpa said...

Looks like FRED is up to date with the revisions.

http://research.stlouisfed.org/fred2/graph/?g=lx1

You have an apple and a blueberry in graph two. Comparing inflation with two different base years seems to always give weird results. I don't know what.

I don't understand what you are doing in graph 3. Can you explain?

Cheers!
JzB

Jazzbumpa said...

Meant to say "I don't know WHY."

Brain fart ==>typo.

JzB

Jazzbumpa said...

The other thing I intended to say is that the RGDP trend over the last 2 years is really disturbing.

JzB

The Arthurian said...

Impressionist economics. The red apple in Graph #2 is *higher* than the blue berry -- output gap and all. My point being that the base-year change is certainly more significant than Graph #1 suggests.

The base-year change is a correction for the inflation shown on Graph #3, which (between 2005 and 2009) came to a little less than 9%.

I'm not doing Richard Feynman here. I'm doing Degas.

Jazzbumpa said...

I've always liked the triangulation in this one.

http://www.edgar-degas.org/The-Blue-Dancers.html

Cheers!
JzB