Apr 30, 2015

U.S. Economy: GDP Report Is Even Weaker Than It Seems

If you look beneath the surface of this rather meager GDP number, it gets worse.

Here is number 1: The Deflator. The government always deflates the nominal GDP by the inflation rate because they want to take the inflation out of the numbers to see what is really going on. That is the real GDP. So normally nominal GDP has to be subtracted, you subtract the deflator from your nominal GDP to arrive at your real GDP. Not this time. Because the government assumed inflation was a negative 0.1%. Negative! Meaning that prices dropped. So instead of taking the nominal number and deflating it, they took the nominal number and inflated it!

Peter Schiff is an American businessman, investment broker and financial commentator. Schiff is the CEO and chief global strategist of Euro Pacific Capital Inc.

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