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GDP Grew By 3.2% (Thanks To Gov’t Shutdown?)

From the Agence France Presse:

US economy scored robust growth in fourth quarter

By Veronica Smith | January 30, 2014

Washington (AFP) – The US economy grew at a robust annual rate of 3.2 percent in the fourth quarter despite the partial government shutdown in October, according to Commerce Department data released Thursday.

Apparently, the ‘government shutdown’ in October was a good thing, after all. (Hiring shot up, too.) So all the news media and the rest of the Democrat Party were wrong when they hysterically predicted doom and gloom because of the 17 day partial shutdown.

We were told it would cost the economy $24 billion dollars, and that it would shave several points off the GDP. Some even predicted it would throw back into a recession.

Growth in gross domestic product was led by pick-up in exports and a strong acceleration in consumer spending, the main driver of the US economy.

So consumers were spending despite the government shutdown and the even bigger uncertainty caused by the debt ceiling debate? The media told us the opposite at the time.

By the way, remember how the news media were horrified at strong consumer spending during the Bush years? Back then it was a terrible sign to have high consumer spending. Now it is great.

In fact, speaking of the Bush years, back then a GDP of 3.2% was seen as proof that we were slipping into a recession by Reuters, the AP and the New York Times. Now it is a sign that the economy is booming. Go figure.

Most analysts had penciled in 3.0 percent GDP growth in the October-December quarter, following the 4.1 percent pace in the third quarter…

Lest we forget, these two recent GDP numbers should be taken with a full salt mine worth of salt, since the Obama administration decided to change the standard for measuring GDP to include research and development and intellectual property, as well as other things that were never counted before.

In fact, we were told last summer that using this new standard could increase the GDP by 3%.

From the July 31st edition of Inc. Magazine:

Look Out for a Big Change in GDP Calculations

New standards require adding R&D and intellectual property spending to GDP calculations.

By Erik Sherman | July 31, 2013

By early August [in the third quarter of 2013], I can confidently predict that U.S. GDP will take a jump. A big one. It’s going to shoot up on the order of 3 percent, because the U.S. Commerce Bureau of Economic Analysis will change a key part of the GDP definition…

Currently, we count spending on R&D and on the creation of entertainment, literary, and artistic originals as intermediate inputs used up during the production of other goods and services. As a result, the contribution of these important innovative activities to economic growth and productivity is difficult to measure…

The big change is that now R&D in all fields will become treated as capital expenses and part of the wealth of nations…

[R]elatively few countries have implemented this new international GDP standard and definition…

In fact, no country in Europe has implemented this change in measuring their GDP.

But that’s okay. Cuba and China and the old Soviet Union and the Eastern Bloc countries used to do this sort of thing all the time to give their denizens an impression of an improving economy.

This article was posted by Steve Gilbert on Friday, January 31st, 2014. Comments are currently closed.

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