US vs. UK GDP

Discussion in 'UK Finance' started by Daytona, Oct 31, 2003.

  1. Daytona

    Daytona Guest

    Daytona, Oct 31, 2003
    #1
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  2. Daytona

    Thom Baguley Guest

    Daytona wrote:
    >
    > Whilst reading about the US 3rd quarter GDP figure of 1.74%
    > (http://www.bea.gov/bea/newsrel/gdp303a.htm), I was struck by the sheer
    > magnitude of the outperformance compared to the UK figure of 0.6%
    > (http://www.national-statistics.gov.uk/cci/nugget.asp?id=192) and the fact that
    > our own BoI MPC is looking to increase interest rates to control spiraling house
    > prices. I wondered what growth rates the UK could achieve with a more balanced
    > housing market ?


    I don't think they are like for like.

    An article in a newspaper I read recently asserted that the US GDP growth rate
    was rather dodgy. They count technological advances as growth. So if a
    computer in 100 mhz computer cost 1000 USD in 2003 and a 110 mhz computer cost
    1000 USD in 2004 that would be 10% growth.

    I have no idea if the article was correct, but that was the gist of it. I'd
    welcome corroboration/debunking!

    Thom
     
    Thom Baguley, Nov 3, 2003
    #2
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  3. Daytona

    The Observer Guest

    "Thom Baguley" <> wrote in message
    news:...
    > Daytona wrote:
    > >
    > > Whilst reading about the US 3rd quarter GDP figure of 1.74%
    > > (http://www.bea.gov/bea/newsrel/gdp303a.htm), I was struck by the sheer
    > > magnitude of the outperformance compared to the UK figure of 0.6%
    > > (http://www.national-statistics.gov.uk/cci/nugget.asp?id=192) and the

    fact that
    > > our own BoI MPC is looking to increase interest rates to control

    spiraling house
    > > prices. I wondered what growth rates the UK could achieve with a more

    balanced
    > > housing market ?

    >
    > I don't think they are like for like.
    >
    > An article in a newspaper I read recently asserted that the US GDP growth

    rate
    > was rather dodgy. They count technological advances as growth. So if a
    > computer in 100 mhz computer cost 1000 USD in 2003 and a 110 mhz computer

    cost
    > 1000 USD in 2004 that would be 10% growth.
    >
    > I have no idea if the article was correct, but that was the gist of it.

    I'd
    > welcome corroboration/debunking!
    >
    > Thom


    I agree with you that such method of calculation is debatable.
    I think the key question is how do you define 'growth' here?

    I could only assume that this 'growth' refers to growth in efficiency since
    it would cost less to calculate same amount of data(increase in computing
    power).
    IMHO, this is flawed. This efficiency gain would only be realised *IF*
    economic agents adopt the use of this new technology. i.e. if companies
    upgrade their computers. Hence less time spent on the same amount of work,
    therefore more work can be done and real GDP growth rate is *realised*.
    Otherwise I would only refer this as potential GDP growth rate.

    I maybe completely....but just a thought.
     
    The Observer, Nov 3, 2003
    #3
  4. Daytona <> wrote:
    > Whilst reading about the US 3rd quarter GDP figure of 1.74%
    > (http://www.bea.gov/bea/newsrel/gdp303a.htm), I was struck by the
    > sheer magnitude of the outperformance compared to the UK figure of
    > 0.6% (http://www.national-statistics.gov.uk/cci/nugget.asp?id=192)


    Well, one quarter is not that significant, but indeed the US has been
    outperforming us by a big margin for many years. In the last three years or so
    US unemployment has risen by about 3%, and yet the economy has kept growing,
    so productivity has kept rising rapidly. It's possible that US GDP could rise
    for 5-6% a year for the next few years as unemployment falls again.

    Also as I point out periodically, people focus on relative changes but the
    absolute difference is even bigger. US GDP is something like $10 trillion, so
    if it grows by 5% that's an increase of $500 billion, which is about a third
    of the *total* GDP of the UK! Or at an individual level US GDP per head is
    nearly $40k, so a 5% increase is an extra $2000 per person per year, which is
    pretty substantial.

    > and the fact that our own BoI MPC is looking to increase interest
    > rates to control spiraling house prices. I wondered what growth rates
    > the UK could achieve with a more balanced housing market ?


    I don't think the housing market has all that much to do with it, at least in
    any direct way. I think it's more to do with a lack of innovation and
    relatively poor education.

    --
    Stephen Burke
     
    Stephen Burke, Nov 3, 2003
    #4
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