How is GDP (Gross National Product) calculated?
First, you take the total value of all transactions in the the domestic (forget exports and imports) economy. Figuring out the value of all transactions is no easy feat but economists do it. They even include an estimate of the underground (cash/illegal/clandestine) economy. But that number grows every year because of inflation. So to get to the REAL GDP growth (the one they talk about on TV), government economists subtract (divide and subtract, but don’t let that confuse you – it’s basically the same) an inflation calculation called the “GDP deflator.” This GDP deflator is exactly the kind of inflation index that Craig Blitz thinks is underreported and miscalculated. Give me an example of what you mean, I’m getting confused. So GDP grows by 5%, inflation is reported as 4%, therefore we have a 2% growth rate, and the president, politicians and media can say the economy is rolling along just fine. But if the inflation number is actually 6% then we have a contraction (negative growth) of
