GDP Boost: Porn, Uber, Herb and Hookers?
Over at our latest, Of Economic Reality, Upward Mobility And Ritholtz?
GDP accounts for housing in two ways:
1. Residential fixed investment: where something new is actually built, added on or remodeling occurs, there is production or output involved.
Averaging 3-5% and accounting for $614B or 3.6% of 2017 Q1 GDP.
2. Housing services: where nothing is built or remodeled, mostly non productive imputations and transfer payments (money shuffling). Gross rents, imputed owner rents and utilities.
Averaging 12-13% and accounting for $2.021T or 12% of 2017 Q1 GDP. (#1 and #2 in 2009 Constant Dollars)
2017 Q1 GDP Growth +1.4%: Residential Fixed Investment +0.5%; Housing Services -0.1%
Source: BEA and NAHB
Kertch - responding to a clueless commentator....
We Natter.... Bingo, Kertch gets it where others completely miss the concept of "vapor", and he makes me think rigging the outcome....
Imputations are a measure of assumed activity which does not really exist. Just because the BEA chooses to DEEM shelter as a source of owners income, doesn't mean that income actually exists, or the owner received any of it.
Try taking that imaginary imputation down to the market and see what one can buy. Please do let me know if one is successful and at what market.
Yesterday, a bachelor went to the market and rather than take public transport, taxi or Uber, he utilized his car. Upon returning, rather than utilize a gardener, he mowed his lawn.
Perhaps we should impute the "income and cash flow" the car and the lawn mower provided too? In that manner this "recovery" would be a most craptacular one indeed?
From our missive....
Only in the latter recreational or prurient case, was money actually spent, product and services consumed and someone else's income increased.
Along those lines, in 2015 Europe did revise up GDP on the grounds of unreported prostitution and illegal drug profits. Tip o the hat to Mish Shedlock on his excellent read, GDP by Other Measures; Will the "Real" GDP Please Stand Up?
You can't save, invest or spend what was never there and you don't have. So imputed "income" cannot and never does make anyone richer. Never the less, the BEA artificially boosts our PCE (consumption), GDP (output) and DPI (disposable personal income) in this manner.
Whether its, output, expenditure or income, including things which are theoretical and DO NOT EXIST can be misleading, and make many IMAGINE their incomes and welfare to be bettered.
If one is going to mislead in their narrative through accounting tricks, then those listening should be skeptical of and have little confidence in: the data and calculations being used....
much less the veracity of any recovery or economic health narrative, or what other IMAGINARY things they are being TOLD to BELIEVE.We reject the received narrative indeed and Out.
GDP accounts for housing in two ways:
1. Residential fixed investment: where something new is actually built, added on or remodeling occurs, there is production or output involved.
Averaging 3-5% and accounting for $614B or 3.6% of 2017 Q1 GDP.
2. Housing services: where nothing is built or remodeled, mostly non productive imputations and transfer payments (money shuffling). Gross rents, imputed owner rents and utilities.
Averaging 12-13% and accounting for $2.021T or 12% of 2017 Q1 GDP. (#1 and #2 in 2009 Constant Dollars)
2017 Q1 GDP Growth +1.4%: Residential Fixed Investment +0.5%; Housing Services -0.1%
Source: BEA and NAHB
Kertch - responding to a clueless commentator....
"I don't know what you are complaining about. It seems you either didn't read the article or you didn't understand it.
"Then he writes that no real transaction occurs corresponding to owner imputed rent, which is true in the reference year of that imputation but not true across time."
Exactly! The BEA, not the author, is making this assertion. The author is, with great pain, trying to point this out. Not only is imputed rent not income, it is not even cash flow.
The BEA's exercise of determining the cost advantage of buying over renting is an exercise suitable ONLY for economic planning.
Whenever someone tries to insert opportunity cost (which is what imputed rent really is) post facto into economic production calculations, somebody is trying to rig the outcome.
We Natter.... Bingo, Kertch gets it where others completely miss the concept of "vapor", and he makes me think rigging the outcome....
Imputations are a measure of assumed activity which does not really exist. Just because the BEA chooses to DEEM shelter as a source of owners income, doesn't mean that income actually exists, or the owner received any of it.
Try taking that imaginary imputation down to the market and see what one can buy. Please do let me know if one is successful and at what market.
Yesterday, a bachelor went to the market and rather than take public transport, taxi or Uber, he utilized his car. Upon returning, rather than utilize a gardener, he mowed his lawn.
Perhaps we should impute the "income and cash flow" the car and the lawn mower provided too? In that manner this "recovery" would be a most craptacular one indeed?
From our missive....
"Indeed, when people consume the service flows from existing durable goods such as cars, appliances, and even art - they are not demanding new production." - quoting Barry Z. Cynamon and Steven M. Fazzari.After mowing, rather than have a drink and watch stale porn, the "batch" went out scored some herb, and found a "working girl" to perform stress release exercises and smoke with.
Only in the latter recreational or prurient case, was money actually spent, product and services consumed and someone else's income increased.
Along those lines, in 2015 Europe did revise up GDP on the grounds of unreported prostitution and illegal drug profits. Tip o the hat to Mish Shedlock on his excellent read, GDP by Other Measures; Will the "Real" GDP Please Stand Up?
You can't save, invest or spend what was never there and you don't have. So imputed "income" cannot and never does make anyone richer. Never the less, the BEA artificially boosts our PCE (consumption), GDP (output) and DPI (disposable personal income) in this manner.
Whether its, output, expenditure or income, including things which are theoretical and DO NOT EXIST can be misleading, and make many IMAGINE their incomes and welfare to be bettered.
If one is going to mislead in their narrative through accounting tricks, then those listening should be skeptical of and have little confidence in: the data and calculations being used....
much less the veracity of any recovery or economic health narrative, or what other IMAGINARY things they are being TOLD to BELIEVE.We reject the received narrative indeed and Out.
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