Double Plus Good GDP

The newspapers are crowing that the GDP is better than expected; we "only" dropped 3.8% instead of the forecast 5+%.

Unfortunately, this is because the agency that released the numbers counted unsold inventory as "growth." Think about that: that means that if a company increased its output of widgets by 20% but wasn't able to sell them, and instead has them languishing on warehouse shelves, gathering dust and carrying costs, and might eventually have to sell them at a steep loss to get them out the door, then we count that increased output as "growth."

I think I'm going to write myself a check for $20,000 today, and crow about how I just got a raise.

Naturally, as soon as you exclude that stagnant inventory from the GDP estimates, we contracted at a rate of... 5.1%.

We are through the looking glass.