Thursday, October 29, 2009

"Real Real" Gross Domestic Product

Because of all the federal stimulus money, Real Gross Domestic Product is no longer quite a reliable measure as to how much the economy is growing. Sure we adjust for inflation to get RGDP, but do we adjust for temporary stimulus spending from the government? Here's a break down of RGDP growth by category.


Notice the government alone accounted for .5% of that economic growth, but if you factor in cash for clunkers, home purchasing credits, not to mention ditch-digging-then-filling projects like this, RRGDP is more like 1.8%. Recovery? Yes. Booming? No. Enough growth to create jobs for the increasing population? Certainly not.

Alas, leave it to the bubble-addicted markets to drive stock prices up by 150 points on the DJIA on the nominal 3.5% growth rate and not the RRGDP.

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