Why Recent Inflation and GDP Numbers Aren’t Reliable

Teh latest reports on inflation and GDP (Gross Domestic Product) from the government aren’t very useful right now, and likely won’t be for several months. This is as of how the government calculates thes numbers, and a big change that happened recently.

Usually, the government adjusts these figures based on seasonal changes – things that happen around the same time each year, like more shopping during the holidays. They also revise the numbers as they get more complete data.however, in 2023, the government changed how it makes these seasonal adjustments. This change affects both inflation and GDP calculations.

The biggest change involves how the government accounts for things like car purchases. Previously, they looked at the actual sales numbers. Now, they’re using a different method that relies more on estimates. This new method is supposed too be more accurate, but it creates a problem when comparing current numbers to past ones.

As of this change, the numbers we’re seeing now aren’t directly comparable to the numbers from before 2023.It’s like trying to measure something with a ruler that suddenly changed its markings. Any comparisons made now will be misleading.

The Bureau of Economic Analysis (BEA), the agency responsible for these calculations, won’t be able to fully fix this issue until July 2024. That’s when they plan to “rebench” the GDP data, meaning they’ll recalculate everything using the new methods going back several years. This will allow for accurate comparisons.

Until then, economists and the public should be cautious about interpreting the current inflation and GDP figures. They simply aren’t a reliable reflection of the economy’s true state.

You can find more facts about this issue at the Bureau of Economic Analysis website.