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Originally Posted by dippin
I am sorry, but you don't understand the difference between nominal growth and real growth, do you?
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I think I do. But, who am I, just one of the few people who actually took a few minutes to look at Obama's budget?
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Budgets will always include "nominal" gdp because they are the budget for the current year. The reason they also forecast inflation for the following years is precisely because they recognize that nominal figures for any year other than the current year is meaningless.
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I think you have it backward regarding what has meaning and what does not.
When I pay taxes I don't pay them on an inflation adjusted basis, I pay them in "nominal" dollars.
When I check my 401(k), the balance is not in inflation adjusted dollars, the balance is in "nominal" dollars.
When I shop, I don't spend inflation adjusted dollars, I spend "nominal" dollars.
When I get compensated for what I do, I don't get inflation adjusted dollars, I get "nominal" dollars.
Nominal dollars are "real", inflation adjusted dollars or what they call "real" are a theoretical adjustment of purchasing power loaded with assumptions in the calculations that may or may not be true on a micro or macro basis. Raw data tells truth, adjusted data tell people what they want it to tell them. I either do my own adjusting or I want to understand in detail the calculations used by others. What you do is your preference, but I know what has meaning and I take the extra step to try to understand that meaning.
Given, Obama's budget, and no explanation of how they came up with the "real" GDP growth rate of -1.2, there is on the surface conflicting information that begs a question (asking questions and not blindly accepting what is said - is the point of my first post on this subject). They show an increase in nominal GDP, a decrease in real GDP, and then they show a negative CPI of 0.6%. Don't know about you, but I need some clarity on that point.
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Nominal GDP growth is not economic growth, it simply means that the price of the goods and services produced in a given year went up. To put it in as simple manner as possible: the Obama administration has assumed that economic production this year will go down by 1.2%. To say that the Obama budget forecast economic growth this year is a lie, it is as simple as that.
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Come now, we know there are different ways to measure "economic growth". If "economic growth" is the increase in goods and services produced by an economy over time that is clearly "nominal". And we can certainly talk about inflation adjusted "economic growth" or what they would call "real". But, then we could measure "economic growth" in terms of productivity gains or "economic growth" per capita, which may actually more accurately reflect the standard of living and in other ways. But regardless of how we split hairs here, nominal or real GDP is one commonly accepted measure of "economic growth".
All of this is kinda fun, but let's not loose focus on Obama's double speak. Assuming we actually have negative GDP growth of 1.2% that is nothing close to the Depression years, starting in 1930 - (8.6%), 1931 - (6.4%), 1932 - (-13%). In 1980 the decline was about (1.9%), in real terms. So, at the very least Obama's doom and gloom rhetoric does not match his budget.