Wow, in dollar terms, I was close on each of the spending categories (see below)!
I expected the GDP deflator to fall a lot more, and the experts thought it would rise. I wonder how much GDP deflator revision is possible.
I expected the GDP deflator to fall a lot more, and the experts thought it would rise. I wonder how much GDP deflator revision is possible.
2 comments:
Wait a second... Professor Mulligan, I confess I do not read your blog all the time; I just check in every week or so. But I thought your maverick prediction was that real GDP in the 4Q was going to go up, wasn't it?
And yet the casual reader, looking at your posts today, would think your predictions had been vindicated, when in fact you were completely wrong.
Am I missing something? If so I will apologize, but I truly had filed away in my head, "If 4Q real GDP goes up, Mulligan is a genius."
I believe that Bob Murphy is correct. I believe that is has to do with the way you view the Productivity Numbers. You say that workers are holding out. I say that Employers are Proactively laying workers off in anticipation of the depth of the downturn. In other words, the layoffs are exceeding the fall in demand. Hence, a temporary rise in productivity. My evidence amounts to quite a few posts showing that this is exactly what employers and employment experts are now saying is happening. Remember, I said that this would happen months ago. A Proactivity Run is a consequence of a Calling Run. These are my own terms for Fisher's Debt-Deflation, which I think is turning out to be a very useful model for what's happening. Based on Fisher, I also predicted a Savings Spree which is now occurring as well.
The current numbers are in line with what I said, only worse. I too thought that GDP would only go down 1%. The real fall is very worrying, because for me it means things are moving faster than Fisher's view would indicate. This is more like falling dominoes. If the projections were using unemployment numbers, then I see that the real drop is less than the drop expected given unemployment. Hence, more evidence that jobs are being shed far ahead of the actual amount of the downturn. Having said all this, I ,quite frankly, find these numbers more dubious than most as a general rule. They are useful, but no more. I admit to not being an economist. I'm just a citizen trying to understand the world. I have to admit that your productivity point does seem important, even though I disagree on what it means.
By the way, I enjoy any comments that help me understand these issues.
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