|
|
GDP |
GDP |
Prices |
|
|
|
$ Millions |
$ Millions |
D08=100 |
|
|
|
Trend |
Trend |
|
|
|
|
Current Prices |
Chain Volume |
|
|
|
Dec-2008 |
315583 |
315298 |
100.0 |
|
|
Mar-2009 |
312921 |
315942 |
99.0 |
|
|
Jun-2009 |
310338 |
317495 |
97.7 |
|
|
%Change |
|
|
|
|
|
D08-J09 |
-1.7 |
0.7 |
-2.3 |
|
Nothing to see here, really, but just thought I would mention it. The Government has made it its claim to economic competence that we, uniquely, avoided recession during the Great Recession. Close run thing, of course, but we never had two consecutive quarters of falling GDP.
Except, as it turns out, we did. And these contractions were not small. As the first column shows, GDP went from $315,583m in December 2008 to $312,921m in March 2009 and then to $310,338M in June 2009. Two consecutive quarters of falling GDP without doubt, with the only point to note being that these figures are in current prices. Over the half year period GDP fell by 1.7%, again I note in current prices.
The constant price data show a relatively strong outcome, with the increase over this half year period 0.7%. The period the national accounts indicate growth rates of 0.1% and 0.0% were the September and December quarters of 2008. The half year period where we find nominal GDP falling but real GDP rising takes place six months later.
So how did we end up with a fall in nominal GDP leading to a rise in real GDP. The price level embedded in the national accounting stats fell even more, in this case by 2.3%.
Sure, why not? For what it’s worth, the CPI over the same period rose by 0.6%.
m0nty
25 Feb 12 at 12:55 pm
I was on the ABS’s Australian Statistical Advisory Council and on their Macroeconomic Statistics Advisory Group when they were developing the chain volume measures. I understand them well enough, I think, but you do have to admit this is a curious result.
Steve Kates
25 Feb 12 at 1:33 pm
Is it not possible to drill down into the ABS numbers and discover the reason/s for the discrepancy?
m0nty
25 Feb 12 at 3:19 pm
Don’t worry about monty, Steve. He just comes out to rattle his chain volume measures from time to time.
blogstrop
25 Feb 12 at 5:24 pm
Falling prices and real GDP. Keynesian policy fail.
.
25 Feb 12 at 5:25 pm
Keynesian policy fail is a redundant term, like ATM machine or PIN Number.
All Keynesian policies are failures. If you wanted to say something different, you would say ‘Keynesian policy success’. But one has never been recorded, so it’s a completely hypothetical term.
Sure, you can get a 6 month sugar rush from throwing money around. But in the long term it will be worse. The knave tried to explain away this by saying ‘we’ll all be dead’. Apparently that is what passed for intellectual thought- bugger the long term consequences, I want some popularity now.
Little wonder politicians lap at the Keynes bowl with their ears pinned back.
brc
25 Feb 12 at 7:35 pm
I’ve got two words to say to you Steve. Trade prices.
sdfc
25 Feb 12 at 8:41 pm
Is there really that much that is curious about the GDP deflator sometimes moving differently from the CPI? They are measuring different things. The former is a much broader measure of price changes than the latter. And the weights in the GDP deflator are updated annually, rather than every 5-6 years like the CPI. And it is well known that for a range of reasons, the CPI overstates actual inflation.
And if the GDP deflator is falling, is there anything really curious about nominal GDP falling at the same time that real GDP is rising?
Alex Robson
25 Feb 12 at 8:59 pm
Implicating Say’s Law, economic statistics should show increasing economic activity as positive indices, and, obviously, decreases as negative.
As Say’s law is explicitly a recognition that stimulating an economy demands stimulating its productive section, not its consuming section, then what are you folks discussing here? Mathematics or non-human action?
Louis Hissink
26 Feb 12 at 1:20 am
SDFC is right again of course.
What the trend figures show us is that we did indeed need a stimulus.
It shows us that by smoothing out the SA figures.
We were headed for a shipwreck.
Very silly to call anything a fail which had only a little bit of one measure in it and then to examine through a prism of trend figures.
On your Marx
26 Feb 12 at 3:36 pm
Ridiculous Homer. This is the first time you have ever justified using trend figures.
“We needed to smooth out SA figures so we calculated a demand management solution in trend figures”
You are kidding yourself Homer.
sdfc – no anaomoly exists elsewhere.
You too are kidding yourself pal. Just look at the evidence.
.
26 Feb 12 at 3:39 pm
Dot
The nominal GDP figures reinforce what I have been saying all along. That national income experienced sharp decline as a result of the slump in export prices.
Dot
The nominal GDP figures reinforce what I have been saying all along. That national income experienced sharp decline as a result of the slump in export prices.
Whether Australia experienced two consecutive quarters of decline in real GDP is neither here nor there. For instance real domestic demand and GNE both shrank for two consecutive quarters. GDP was only kept out of negative territory in March 09 because of a sharp fall in import volumes.
sdfc
26 Feb 12 at 4:22 pm
You said the stimulus didn’t work? Thanks!
.
26 Feb 12 at 5:03 pm
Yes, it was a recession in all but name. At the time, I called it “the recession we had to deny“.
On Keynesian responses I concluded that “the various stimulus measures to date have merely delayed the inevitable.”
Gavin R. Putland
26 Feb 12 at 5:12 pm
Only if you are a simpleton Dot who thinks that a 0.5% defline is some sort of limit.
sdfc
26 Feb 12 at 5:19 pm
“Defline” WTF?
.
26 Feb 12 at 7:08 pm
What is the point of pulling people up on typos on a blog?
sdfc
26 Feb 12 at 7:28 pm
So ummmm monetary policy, the exchange rate and of course the steep climb back in the terms of trade… they had no impact. It was only the Lurch/Rudd insulation fiasco and the school dunny programs that kept us out of trouble.
lol
JC
26 Feb 12 at 7:34 pm
Because your sentence is nonsense. It’s not really the typo I was having a go at in particular.
I see. You must have meant decline. Now it’s not nonsense, just esoteric.
Handing out $900 cheques three months later stopped imports when the dollar went down? Um okay. Borrowing money to buy questionable education capital expenditure six months later reduced imports as well?
You’re gonna have to explain how those two examples in particular worked.
.
26 Feb 12 at 7:39 pm
Like love, Keynesianism is never having to say you’re sorry.
JC
26 Feb 12 at 7:51 pm
JC
We are discussing whether Australia can be said
We have been through this on numerous occasions unless you have something fresh to contribute why bother? It really is deja vu all over again.
Dot
You miss the point entirely. Let me say it again, the reason we didn’t get two successive quarters of declining real GDP is because of the positive contribution of a fall in import volumes. Falling import volumes are not a sign of economic strength.
Domestic demand, which is what really matters for employment, fell 0.5% in Q4 08 and again in Q1 09.
sdfc
26 Feb 12 at 8:13 pm
Forget the first line.
sdfc
26 Feb 12 at 8:14 pm
What fuck is that supposed to mean? Stay off the booze.
JC
26 Feb 12 at 8:30 pm
and if you make the same stupid arguments, you get the same replies, SDFC. Stop being an interminable idiot.
JC
26 Feb 12 at 8:32 pm
No, you fail to rebutt cogent arguments against Keynesian policy.
If you can’t explain how it works, it is a load of cobblers.
This is economics, not theology.
.
26 Feb 12 at 8:42 pm
JC
I save my drinking for a Friday night JC and as much as I can tolerate arguing the same thing over and over again when I’ve had a few. I find your consistent idiocy a little dull when sober.
Take your comment at 8:30 for instance which came even after I said “forget the first line”. Maybe I should have used the nancy-boy oops as you are inclined to do when you make a blue.
We were discussing the national accounts. Of course you have nothing to add because you are a buffoon. And a dull one at that.
sdfc
26 Feb 12 at 8:46 pm
Dot
There was no argument for or against Keynesian policy. It was a statement on the composition of GDP.
Just calling something a failure does not constitute an argument. I should be used to the lack of coherent argument however it seems par for the course on this site.
Even when I make a statement that amounts to agreeing with Steve that the economy for all intents and purposes did get two quarters of negative growth you still don’t seem to get it. Too busy getting all worked up at the enemy I suppose.
As for how Keynesian policy works. Cash flow, as I have said over and over again. If you are going to criticise at least have the decency to comprehend what I have been arguing the past couple of years.
sdfc
26 Feb 12 at 8:54 pm
It’s borrowed money you dope. The government borrows a ton of it, gives to the constituencies it wants to favor and then has to repay it, limiting potential growth. In other words we’re eating the future…well not all of us, only those favored few and we all end up paying.
That’s the “cash flow” racket you support, SDFC, you lunatic.
JC
26 Feb 12 at 9:00 pm
I didn’t do that.
I want you to explain how the following helps us in a demand shock:
Handing out $900 cheques three months later stopped imports when the dollar went down? Um okay. Borrowing money to buy questionable education capital expenditure six months later reduced imports as well?
You’re gonna have to explain how those two examples in particular worked.
I remind you that 40% of the stimulus cheques were saved.
This explains absolutely nothing.
If you respond that asking questions is “missing the point” once again, you’re obviously not being honest or serious.
.
26 Feb 12 at 9:19 pm
He’s just being an idiot as usual. He can’t help himself.
JC
26 Feb 12 at 9:21 pm
JC
It’s funny how you hold yourself up as a financial guru yet seem to think that once money is spent it is extinguished in some way.
Dot
Borrowing money to buy questionable education capital expenditure six months later reduced imports as well?
No one has said that but you. Posting it again just confirms you have no idea.
No use for the last comment JC. I already know you are a numbnut.
sdfc
26 Feb 12 at 9:40 pm
I made no misstatement of fact.
Please tell me why this proves I have “no idea” given the justification for the stimulus you gave earlier?
.
26 Feb 12 at 9:52 pm
What the hell are you talking about?
Who said spending in Q2 and Q3 09, caused imports to fall in Q4 08 and Q1 09? Which afterall is the period of time we were talking about as per Steve’s post.
sdfc
26 Feb 12 at 10:09 pm
Um, you know, how the stimulus ACTUALLY was implemented.
.
26 Feb 12 at 10:40 pm
No you brought up the stimulus. I didn’t bring it up because I thought it would make a change to actually discuss the national accounts during the height of the GFC.
Silly me I should have known you’d want to go over the same ground for the umpteenth time.
sdfc
26 Feb 12 at 10:57 pm
sdfc sure I brought it up, now can you even follow your own argument or do you concede that stimulus doesn’t work, or are you just avoiding the question?
Why bring up “trade prices” and “the stimulus is how you reduce imports” but also “cash flow” etc if you’re not making that argument?
.
26 Feb 12 at 11:01 pm
Trade prices were the reason for the decline in NGDP. No one said stimulus reduced imports. It was a decline in domestic demand that lowered imports.
I bought up cash flow in response to a comment by you. My initial comments were regarding the national accounts with no mention of stimulus.
sdfc
26 Feb 12 at 11:23 pm
So what you’re saying is your preferred policy response has no direct or indirect mechanisms?
It’s magic pudding economics alright.
“It works. Just don’t question how it’s done!”
Reminds me of something Gillard said.
I’m not listening to this rudeness, I’ll answer your question and then I’ll give a question to your colleague, thank you very much.
The cashflow argument is entirely spurious. It isn’t in the GT, you have never laid out a theory of how it works and it is no better than mandating everyone start writing each other IOUs.
.
27 Feb 12 at 9:42 am
Steve do you have a link for where I can get these numbers?
RodClarke
29 Feb 12 at 8:08 am
Just go to the ABS website: http://www.abs.gov.au and then to the data on the National Accounts. Then choose amongst which set of data you are looking for. Don’t go into the publication itself, however, unless you want only the most recent numbers.
Steve Kates
29 Feb 12 at 8:30 am