Inflation vs. GNP – How much is the US Economy REALLY Shrinking ?

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  • Sun, Oct 24, 2021 - 12:53pm

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    LBL

    LBL

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    Inflation vs. GNP – How much is the US Economy REALLY Shrinking ?

If I was to guess how much prices rose in the period leading up to Covid,
and price rises “during Covid” (2020 & 2021),
I would say –
2000 to 2019 Annual inflation @ 5%, GNP increase @3%
2020 & 2021 Annual price inflation @ 8%, GNP [email protected] 3%

So the US economy was (very approximately) shrinking at the rate of 2% a year from 2000 to 2019, and 5% a year in 2020 & 2021.
1.02 ^ 20 (2000 to 2019 is 20 years), 1.486 … but no need for 4 places, this is an approximation. 1.49
1.05 ^ 2, 1.1
So, from 2000 to 2021 inclusive (22 years total) the US economy shrank 1.59, very approximately.
i.e. in 2021, the US economy is 63% of the size it was in 2000.

This is the kind of exercise that raises more questions than it answers.
For example, though rents have obviously doubled in most or many markets “during Covid” (2020 & 2021), there are also lots of us with fixed mortgages. I keep paying $700 a month for mortgage and get the same amount of housing each year. So balancing those out … I guess it involves collecting & analyzing a lot of data.

Anyway, I’m curious what your estimates are for price inflation and GNP increase, for whatever period of time you feel qualified to talk about.

One of my observations about the cost of health care … for me it was
2000 to 2013 about $300 a year (1 $200 medical appointment, and 1 more appointment, sometimes)
2014 to 2019 rising from $10,000 a year to $20,000 a year
2020 & 2021 I would say that the cost of health care in the US became near infinite in this time period.
Because Americans were unable to buy basic healthy health care for even $20,000 a year, related to the US medical industry withholding effective prevention & treatment of Covid19.

 

In the medical industry, they use the term “procedure volume”, e.g. to describe dental cleanings.

I think that is a useful way to assess the real economy, though translating procedure volume into something material, like the amount of breakfast cereal sold … well you would need more economic data.

 

Now if one of us worked at the Federal Reserve, or Morgan Stanley, and had access to loads of economic data, and were paid to calculate inflation, without political interference … well it would help us to come up with a more accurate number.

 

But, lacking that, what are your estimates of how much the US economy is shrinking ?

 

Or if you think it is literally growing, in terms of “procedure volume” – then how much is it growing, and what assumptions is that calculation based on ?

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