[quote]hedo wrote:
Orion-
I found the following link on the OECD.org
whebsite. It is a Paris based organization that does not share your view of US Economic statistics.
www.oecd.org/dataoecd/14/23/16694808.ppt
I would appear that since 2002 the Hedonic calculation has been used in Europe and it generally shows less growth and is more accurate…according to the Europeans. In fact it is being adopted in Europe and has been since 2002.
US GDP may be under reported and that wide variations exist between Japan, Europe and the US.
Further resarch indicates that Hedonics was introduced in the private sector in 1936 to value rapidly rising and falling prices for captial goods. If Hedonics aren’t used and physically calculating all goods and serivces is not possible what other method could possibly be used other then estimation?
The US method appears to be the more accurate measurment and the previous European method less so. Regardless what is the more accurate method the variations between the two most common and valid methods appear to be less then 1/10th. of 1%.
If all are aware of the methodology then virtually any adjustment is possible to satisfy the whims of the end user. (transparency)
I don’t agree that the US or any of the European countries are fudging the data. The data is very difficult to interpet however. It is a complicated issue and an easy way to estimate national output and growth doesn’t exist. That’s why estimates are used.
I did read the articles you posted. Some were quite old. If one followed the advice of the Pimco Bond manager when he wrote the article in 2004 you would have got killed in bonds and not done so well in real estate getting in at the top, with leveraged assets. I’m not sure a financial newsletter is going to be very informative when setting national economic policy. Regardless such bad advice should make one wary of his other reasoning. In this case hindsight being 20/20 since the article was written in 2004 and we can see how accurate his evaluation of US statistics has served him and his clients.
I would be interested to see a refutation of the US methodology for calculating economic statistics from a respected authority or institution. Preferable by someone with credentials. The links you posted, were interesting opinions but not really hard data or filled with facts…more conclusions then anything else.
Good God I have to much time on my hands today but it’s spring in the US and I’m staring out the window at a nice sunny day.[/quote]
I am not really against the use of hedonic statistics.
They have their time and their place, even in some government statistics- The initial problem was, how do you account for that goods are getting permanently better? If you get the a car in 2008 with the same number of salaries than in the 50s, how do you measure that you get much better car?
That is definitely a problem and hedonic statistics are a legitimate answer.
The question is when, where and how do you do it. When you do it to measure productivity it fails, you cannot just assume that you get more productive in any true sense of the word just by using faster computers. Hedonic measuring of the GDP however does exactly that.
So, I am not against the use of such statistics per se, but only when people start lying with it.
Inflation is a separate issue, even to “quality adjusted” measuring takes place there too.
However I think that we can both agree that it is more than questionable when, as a rule, those goods that are rising the most are automatically eliminated from the index because it is assumed that people automatically substitute them alternatives.
Especially with gas, food and lodging however that is simply not true for most people and as I mentioned before they are no longer part of the US core CPI.
Finally, it is everything together that does not look good. It is the Fed inflating the money supply for 30 years now, it is the Fed no longer publishing M3 numbers, it is the dropping dollar, the underreporting of inflation and the questionable official numbers.
If Peter Schiff is right, the US is sitting on a giant bubble that can burst any second and even the official numbers practically scream “denial”.
