We’re talking US GDP here. Look at this chart, from Perform Storm, an 84-page PDF from the research guy at a company called Tullett Prebon:
Here’s what the bottom line means: A heavy portion of U.S. GDP is “imputed” by the government’s economists. If you ranted to take the time, you could EASILY (effortlessly) demolish things like “financial services not charged” . . . how the heck is THAT part of Gross Domestic Product?
Here’s what the TP research chief wrote about the biggest number above (bolding by EleBlog) –
The largest single such imputation – worth over $1.2 trillion in 2011 – concerns “owner-equivalent rent”. If a person owns his or her home outright, no mortgage or rent is payable, and no money changes hands in respect of the property.
But the reporting methodology for American GDP assumes that such a property has
a utility which a purely cash-based measure fails to capture. Therefore, GDP contains a sum representing the rent which the owner would have paid (presumably to himself) if he had not
owned the property.Interest expense is backed out, but the net result remains a major, non-cash uplift to GDP.
The replacement of actual expenditure with a notional (‘imputed’) rent applies not just to those Americans who own their homes outright, but also to those with mortgages. For example,a person with 50% equity in his home is assumed to pay rent on 100% of it
rather than, as is actually the case, mortgage interest on half of it.
What difference does this make to electrical contractors? Your country is being run by economists, who are printing money and leading politicians around by the nose. There is a fair chance that the economists are creating Phantom numbers . . . and that they have no idea what they are talking about, much less what they are doing to the economy in the present and future.
This GDP nightmare is just one piece of evidence.
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