The GDP number is already BS, but Obama's making it worse. Here's an example of the way the books are cooked today.
Scenario 1. Tomorrow, ExxonMobil spontaneously hires an unemployed petroleum engineer for $100K per year. She spends a year looking for new oil, finds nothing.Scenario 2. Tomorrow, the federal government spontaneously hires an unemployed petroleum engineer for the same $100K. She spends a year looking for new oil, finds nothing.So, how do these two alternative scenarios impact the official GDP figures?Scenario 1 has zero impact on GDP: No oil to sell=no extra consumer purchases=no extra GDP. As the Bureau of Economic Analysis says, “Personal consumption expenditures…is goods and services purchased by persons…”Scenario 2 raises GDP by $100K. As BEA says, “Government consumption expenditures…consists of…compensation of employees…”Hiring a worker who (through no fault of her own) accomplishes absolutely nothing raises GDP if the government does the hiring. Hiring a worker who (through no fault of her own) accomplishes absolutely nothing does nothing to GDP if the private sector does the hiring.Why? Because GDP counts government salaries as “government expenditures” as soon as the government hires a person. But the “consumption” and “investment” parts of GDP only count genuine purchases by the private sector (leaving the oddities of imputed spending for the coda below).
Here's the way the GDP is going to be calculated tomorrow ... making it "bigger" without ANY real increase in production.
In March 2013, the U.S. government invented a new way of calculating GDP. The Financial Times reported that starting from July 2013, U.S. GDP would become 3% bigger due to a change in statistics. [GDP] now includes R&D spending, art, music, film royalties, books, theatre. This change in GDP statistics has not been implemented elsewhere in the world. So the U.S. is the first to accomplish this rewriting of the GDP number.
From the comments:
8.The US government is becoming more like the central government of China. It is churning out numbers that one cannot and should not believe. This is like having a thermometer on which the only number on the scale is 98.6 degrees.15.While interesting this is nowhere near as manipulative as the great inflation calculation change. It took a real genius (or something) to come up with removing the price of things people buy (gasoline, food and such) from inflation because their prices are too volatile, and they’re too volitile because people buy them.24.I have long since ceased to believe anything coming out of the Federal government. Let me be perfectly clear: Every bit of information coming from the United States federal government is a bald-faced lie unless and until proven otherwise.