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Thursday, March 28, 2024

Investigating the GDP Deflator: Wildly Differing Results Depending on Your Choice

Courtesy of Mish.

As noted in Real Q1 GDP 0.2% vs. Consensus 1.0%; Disaster in the Details I got the first quarter GDP forecast details correct.

However, a bit of self-assessment with differing GDP deflators shows my prediction of close to zero growth could easily have looked rather silly.

I asked Dough Short at Advisor Perspectives what the GDP would have looked like using various deflators:

  1. GDP (Implicit GDP Deflator)
  2. PCE (Personal Consumption Expenditures)
  3. CPI (Consumer Price Index)
  4. Shadostats (Williams’ Alternate CPI)

Charts are shown below.

Both Doug and I consider Shadowstats absurd, but we include it because many follow the number. For a recent critique of the measure please see Deconstructing and Debunking Shadowstats.

clock on any chart for sharper image

GDP Implicit Deflator (Official GDP)

GDP with PCE as Deflator

GDP with CPI as Deflator

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