{"id":198492,"date":"2007-11-04T21:59:00","date_gmt":"2007-11-05T02:59:00","guid":{"rendered":"https:\/\/www.panix.com\/~msaroff\/40years\/2007\/11\/04\/ok-i-was-right-how-did-i-do-that\/"},"modified":"2007-11-04T21:59:00","modified_gmt":"2007-11-05T02:59:00","slug":"ok-i-was-right-how-did-i-do-that","status":"publish","type":"post","link":"https:\/\/www.panix.com\/~msaroff\/40years\/2007\/11\/04\/ok-i-was-right-how-did-i-do-that\/","title":{"rendered":"OK, I Was Right, How Did I Do That?"},"content":{"rendered":"<p>Remember when I said that &#8220;<a href=\"http:\/\/40yrs.blogspot.com\/2007\/10\/economic-update.html\">Maybe they know that there is some level of bullsh&amp;% in the figures that they cannot trust<\/a>.&#8221;  In response to why the Fed would cut rates when the economy was growing at a brisk 3.9% growth rate?  I also noted that the markets felt the same way too.  The dow fell something like 350 points.<\/p>\n<p>Well, Barry Ritholtz of<br \/><a href=\"http:\/\/bigpicture.typepad.com\/comments\/2007\/10\/i-call-shenanig.html\">The Big Picture gives us all the specifics on what happened<\/a>.  It appears that a measure of inflation, &#8220;the price deflator rose a much less than expected .8% vs expectations of 2%.&#8221;<\/p>\n<p>Essentially, this is a measure of inflation, and is used to separate out real growth from inflation.  By lowering the price deflator, you count <span style=\"font-weight: bold;\">inflation<\/span> as <span style=\"font-weight: bold;\">real growth<\/span>.<\/p>\n<blockquote><p>The average of the price index since Q1 2004 to Q2007 was 2.98, ranging froma low of 1.7% to a high of 4.2%. Thus, if the deflator matched consensus, it would have generated a GDP of 1.9%; if it was at its recent 3 year average of 2.98%, GDP would be ~1%.<\/p><\/blockquote>\n<p><img decoding=\"async\" src=\"http:\/\/img100.imageshack.us\/img100\/6195\/pricedeflator2mb2.gif\" \/><\/p>\n<p>See the graph, and notice the WTF: point.<\/p>\n<p>This I think, is the difference between an amateur (me) and a professional (Mr. Ritholtz).  I knew in my gut that something was off, but a professional can tell where, and how.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Remember when I said that &#8220;Maybe they know that there is some level of bullsh&amp;% in the figures that they cannot trust.&#8221; In response to why the Fed would cut rates when the economy was growing at a brisk 3.9% growth rate? I also noted that the markets felt the same way too. The dow &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[970,973,1200],"tags":[],"class_list":["post-198492","post","type-post","status-publish","format-standard","hentry","category-corruption","category-economy","category-inflation"],"_links":{"self":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/198492"}],"collection":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/comments?post=198492"}],"version-history":[{"count":0,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/198492\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/media?parent=198492"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/categories?post=198492"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/tags?post=198492"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}