Thanks. Good to see you’re fighting the good fight 😉

You were linked as a key source into David Altig’s fine and credible piece on this at Macroblog.

Disinformation is no service to those who are trying to understand economics – you’ve done a good job correcting the record here.

I was the persistent anon on the Big Picture posts.

Exactly, a net exporter of fuel would have had a much larger GDP deflator than an net importer – as exports are a positive addition to GDP while imports are a detractor.

Hi Barry,

“GDP should measure what the total production in the USA — as it is, it does a rather poor job of it.”

I just don’t agree with this – it is a good measure of “production”. Fundamentally, when we discuss production we are interested in finding some objective measure of the “volume” of production.

We can’t do this so there are areas where the statistics agencies make subjective assumptions in order to achieve volumes. I often read your blog and have noticed that you criticise this often – and that it fine, subjective assumptions are an issue that we should always debate.

However, in recent days I have noticed that you have been doing the following:

a) calling the GDP deflator inflation
b) stating that it is a misleading indicator of inflation,
c) stating that we should deflate all GDP, but keep nominal petrol prices in there.

But the GDP deflator is not inflation (http://tvhe.wordpress.com/2008/07/05/what-is-inflation/), as a result calling it a misleading indicator only comes from the fact that you have misdefined it.

Also, not adjusting for petrol price changes implies that we “double count” any change in petrol prices – and as a result our volume measure is wrong.

“The conspiracy claim sis the refuge of the lazy and ill informed”

I agree that my claim is lazy (as I could figure out a more suitable way of stating that I thought you were misinforming people), however it is not ill informed.

Ultimately, I agree with you that people have to be careful when they look at information – to make sure that what they take out of it is actually a logical consequence. However, I am not confident that you have actually done that in this case.

“Understand that this is not a political issue, but rather, a quantitative analytical one, reflecting fair-to-poor econometric modeling, one with an inherent downside bias as to the inflation data, and an upside bias when it comes to GDP and job creation . . . ”

The conspiracy claim sis the refuge of the lazy and ill informed . . .

Rather, it is merely a poorly constructed model.

GDP should measure what the total production in the USA — as it is, it does a rather poor job of it.