Friday, June 10, 2011

Why U.S. U.S. Recession Was Deeper Than GDP Numbers Suggests

I have repeatedly called into attention (for example here) the fact that the income based numbers gross domestic income/national income have been a lot weaker the past few years than the expenditure based gross domestic product/net national product, even though they theoretically should be identical. This means that the U.S. recession was a lot deeper than the GDP numbers suggested, something that is reflected in the fact that though GDP fell less than in most other countries, employment fell more. The below chart illustrates this discrepancy.
Here is an article from Jeremy Nailwaick which also calls this fact into attention and also argues that the income numbers are more reliable than the expenditure numbers.


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