GDP Calculations

BarroMetrics Views: GDP Calculations

Today the FT trumpeted that the ‘OK economy (gained) statistical boost’.

On closer reading we find that the ‘improvement’ was the result of ‘improved’ revisions. As a result of the revisions, GDP grew an extra 1% per annum from 2010 to 2012; and as a result of the improvements, the recession of 2008 and 2009 was not as great as we had thought. Indeed from 2008 to 2012 the output level increased by 2.6%.

If only trading profits were that easy, with a stroke of a pen I could increase my bottom line!

The problem is, like the US, the real picture is very different. In the UK, family finances were on the slowest on record. Like the US, the middle class is paying for Government policies (see How the Middle  Class Became the Underclass).

When the dam of QE breaks and the results come home to roost, who will the Governments blame? In the meantime, my stock indices trading strategy remains the same: “long or out”.