![]() ![]() It's calculated by adding up the value of all the goods and services produced in the United States.īut you can calculate the same number by adding up all the income needed to produce this stuff. That's called Gross Domestic Income, or GDI. Here's a table that shows the main components of GDP and GDI: Here's what that looks like over the past few years: If these are supposed to be the same thing, why is GDP only $24.4 trillion compared to GDI at $25.2 trillion? As you'd guess, it's impossible to measure all the components of GDP and GDI precisely, so there's always a statistical discrepancy. The statistical discrepancy is usually on the order of 1-2%, but for the past year it's been rising well above its norm. In other words, GDI was 3.4% bigger than GDP. So which one is right? GDP is normally considered the more reliable measure because its components are easier to measure. Still, a discrepancy of 3.4% is a lot, and it affects what we think of economic growth. Take a look:Īccording to GDP, the economy shrank last quarter at an annual rate of 1.6%. According to GDI, it grew at an annual rate of 1.8%. So why did I go through all this? Just to give you the background to a recent set of remarks from James Bullard, president of the St. He believes that GDI is more consistent with other economic indicators at the moment, which means the economy isn't slowing down all by itself. ![]() It's growing at a normal rate.Īnd that, in turn, means that we can't count on a slowing economy to rein in inflation. We need to take more aggressive action, like the big rate increase the Fed announced a few weeks ago. Is he right? That's above my pay grade, and only future revisions of GDI and GDP will tell us which one was actually more accurate. I'm just passing it along to help us all understand some of the thinking that goes on in the Eccles Building these days. In 2017 Donald Trump fired FBI Director James Comey because he was pissed off over Comey's investigation of him. A year later Comey was chosen by the IRS as a lucky recipient of the rectal probe version of a tax audit, an audit so intensive and so rare that the odds of being chosen randomly are astronomical.īut still, stuff happens. In 2018 Trump fired Comey's assistant, Andrew McCabe, 26 hours before he qualified for his full pension. Two years later, McCabe was also chosen for a rectal probe audit. What a coincidence! Needless to say, everyone denies everything. It sure sounds like the good old days of Richard Nixon made a comeback in the Trump era, doesn't it? But if you believe that, I have a swamp and a bridge and some cryptocurrency you might be interested in. ![]() POSTSCRIPT: Even if the IRS finds nothing, these kinds of audits are expensive and time consuming. The New York Times reports that Comey had to spend $5,000 on accountants' fees to eventually learn that he had overpaid his taxes by $347. McCabe ended up paying a "small amount" of money. In comments last night, skeptonomist accused me of rarely being interested in showing income inequality. This cut me to the core, but there's truth to it and it's worth showing you why. The single best set of numbers for income inequality come from the CBO. So without further ado, here are two charts based on CBO income figures: There are two reasons: (a) they collect a broad set of income figures, including capital gains and means-tested benefits, and (b) they include figures for the top 1%, which is where inequality has risen the most. The top chart shows the GINI coefficient, which is the most common measure of income inequality. ![]()
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