Through the person of its US \”finance and economics editor\”, Heidi Moore.
Would you believe it she\’s even worse than the Guardian\’s UK economics nutters?
For the first time, the US is changing the way it measures its economic growth, the measure we call our gross domestic product. Starting in July, the keepers of US economic data at the Bureau of Economic Analysis will stand over the usual cauldron of GDP – a stew that includes how much Americans consume, government spending, investment, exports and imports. They\’ll begin to add new ingredients that, in a puff of smoke, will create a more favorable, higher gross domestic product.
The new ingredients include Hollywood royalties from TV, movies and songs – some Tinseltown magic, really – as well as revenues from scientific research and development. Like a feelgood movie, this will make us feel positive, briefly – boosting our GDP by as much as 3% from its currently anemic level of 0.4%.
I think you can see where this is going, can\’t you? She\’s confused between the level of GDP (what we produce) and changes in GDP (how fast or slowly the amount we produce is changing). And you might think that that\’s just clumsy editing or something, but I\’m afraid it isn\’t:
For one, it will be harder for us to know when we\’re in a recession. Right now, a recession means several quarters of negative GDP.
No, no it doesn\’t.
Getting to negative from where we are now isn\’t hard; getting there when we\’re 3% higher will be. While it may seem useful to avoid recession right now, that is actually a bad thing: it means that in periods when we do get negative GDP, we\’ll be in truly terrible shape.
Dear Lord. A recession is several (actually two) quarters of negative *growth* in GDP. Thus whatever our actual level is, 100, or 103, makes no difference at all to our ability to either declare a recession nor our ability to be in one. And what in fuck is negative GDP?
In theory I suppose you could have it. No value was added in the economy at all. In fact, output was worth less at final market prices than the raw materials used to produce it at market prices would do it I suppose. But it\’s very difficult indeed to think of anywhere that has ever done this. Even in the glorious days of Soviet tractor statistics there were only a few factories that managed this prestigious feat.
Hollywood royalties, for instance, are not secure measures of investment.
Well of course they\’re not. They\’re income from past investments.
That\’s because, even in Hollywood, it\’s hard to measure what royalties are, or should be. Studios rely on notoriously tricksy accounting. Four major studios were hit with lawsuits this year over their accounting of royalties dating all the way back to the 1970s. \”Hollywood accounting\” is a shorthand for the obscure methods the industry has of turning profit into loss, or losses into hidden profits.
This chaotic mess of financial reporting will now be part of our national measure of economic health. What could possibly go wrong?
Err, no. Because we can measure what royalties actually are. Which is the number we plug into the GDP one.
She\’s simply not got the first clue about the subject under discussion, does she? Wonder what Larry Elliott thinks of this?
But let\’s not bne too, too, hard on The Guardian here. I reveal one of the things that is wrong with the world:
Heidi Moore is the Guardian\’s US finance and economics editor. Formerly, she was New York bureau chief and Wall Street correspondent for Marketplace, from American Public Media
APM is, I think at least, something like PBS, or their equivalent of the BBC sorta thing. And when you\’ve got \”Wall Street Correspndents\” who really have no clue about the subject under discussion then the public conversation about said matters is not going to be all that good, is it?
I wouldn\’t mind so much if they employed people with different views, different arguments about the way the world should work. But can\’t we at least start with people understanding the basics of the subject they are supposedly covering?