The GDP Deflator Redux

Earlier this week I wrote about the apparent dichotomy in U.S. defense spending in the durable goods vs. gross domestic product reports. It reminds me of the GDP deflator issue that I discussed last year in "Deconstructing Inflation." (I suggest reading that column in conjunction with this, and you may want to refer to the GDP figures (PDF) as well.)

The Implicit Price Deflator (on page 10, table 4, line 30 of the GDP document) show that the Bureau of Economic Analysis used a price deflator of 0.6% for the fourth quarter of 2012 and 2.7%, 1.5%, and 2.2% for quarters three, two and one, respectively. It also shows the same pattern of a sharp decline in the fourth quarter of 2011 vs. the three previous quarters -- which, incidentally, was my reason for writing about this in May....415 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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