GDP Vs GDI The Huge Discrepancy And Which Is The Better Measure Of The Economy?www.zerohedge.com/economics/gdp-vs-gdi-why-huge-discrepancy-and-which-better-measure-economy
482 sats \ 9 comments \ @siggy47 2 Jun econ
I don't know much about GDI, so I was glad to get some kind of explanation. Intuitively I never would have seen them to be equivalent or measuring the same thing.
Product produced should match sales and income.
I guess it makes sense.
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88 sats \ 4 replies \ @grayruby 2 Jun
Great. Another fraudulent number to consider. Haha.
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73 sats \ 3 replies \ @Undisciplined 2 Jun
They're supposed to be the same number. Accounting wise, they should be equivalent. I haven't had a chance to read the article yet, though.
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42 sats \ 2 replies \ @grayruby 2 Jun
Doesn't mean they aren't fraudulent.
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63 sats \ 1 reply \ @Undisciplined 2 Jun
Of course not, but in a good accounting fraud the books would at least appear to balance.
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42 sats \ 0 replies \ @grayruby 2 Jun
Touche
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54 sats \ 2 replies \ @Bell_curve 2 Jun
Gross Income is income not sales.
GDI should not match GDP.
I buy a shirt for 99 bucks. GDP measures commercial activity. Income does not.
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13 sats \ 1 reply \ @siggy47 OP 2 Jun
I tend to agree
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54 sats \ 0 replies \ @Bell_curve 2 Jun
GDP (Gross Domestic Product) and GDI (Gross Domestic Income) are two different measures of economic output in the United States. While GDP measures the total value of goods and services produced, GDI estimates the total income earned from that production. In theory, they should be equal, but in practice, there is often a discrepancy between the two measures.
The key differences between GDP and GDI are:
Measurement Approach
  • GDP measures economic output by tallying all spending by businesses, consumers, government, and overseas entities through surveys of retailers, manufacturers, etc.[1][2]
  • GDI estimates output by summing up all income earned in the form of wages, profits, interest, dividends, and rents, relying on data like unemployment insurance claims.[1][2]
Potential Advantages of GDI
  • Initial GDI estimates tend to be closer to the final estimates of both GDP and GDI, suggesting GDI may be more accurate initially.[1][3]
  • GDI may better predict recessions and economic inflection points than GDP.[1][2]
  • GDI relies more on hard data like wages, making it potentially more reliable during transitions.[1][2]
The recent large discrepancy between GDP and GDI, with GDP significantly outpacing GDI, could signal issues like uneven income distribution, falling productivity/profitability, or measurement errors.[4] Historically, such gaps have preceded recessions.[6] However, the gap may also correct itself through data revisions over time.[5]
Sources [1] https://www.zerohedge.com/economics/gdp-vs-gdi-why-huge-discrepancy-and-which-better-measure-economy [2] GDP may paint a sunny picture of the economy, but this number tells ... https://www.usatoday.com/story/money/2023/12/01/gross-domestic-income-gdi-possible-recession/71746276007/ [3] Better Measure of Output: GDP or GDI? https://www.stlouisfed.org/on-the-economy/2016/march/better-measurement-output-gdp-gdi [4] What Does the Gap between GDP and GDI Signal for Investors? https://www.thornburg.com/article/what-does-the-gap-between-gdp-and-gdi-signal-for-investors/ [5] The Discrepancy Between Expenditure- and Income-Side Estimates ... https://www.clevelandfed.org/publications/economic-commentary/2023/ec-202301-discrepancy-between-expenditure-income-side-estimates-us-output [6] GDI Or GDP - 2 Economic Measures, 2 Different Messages - RIA https://realinvestmentadvice.com/gdi-or-gdp-2-economic-measures-2-different-messages/
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0 sats \ 0 replies \ @Bell_curve 2 Jun
GDP and GDI are two different measures of economic output, with some key differences:
GDP (Gross Domestic Product) measures the total value of goods and services produced within a country, calculated by adding up consumer spending, business investment, government spending, and net exports. It is the more widely used and reported metric.
GDI (Gross Domestic Income) measures the total income earned from the production of goods and services, calculated by summing wages, profits, rents, and other sources of income. It is an alternative way to estimate economic output.[1][3]
In theory, GDP and GDI should be equal since every dollar spent (GDP) must be received as income (GDI). However, they often diverge due to differences in data sources, estimation methods, and timing of revisions.[1][2][4]
Some key points about the GDP-GDI gap:
  • GDI may be a better indicator of turning points in the economy and at predicting recessions compared to GDP.[1][3]
  • The gap can signal issues like uneven income distribution, falling productivity/profits, or income flowing out of the country.[2]
  • Recent data shows GDI growing much slower than GDP, suggesting GDP may be overstating economic strength.[1][5]
  • The gap is expected to narrow as more data becomes available and revisions are made, but it persists even after revisions.[4]
So while GDP remains the headline metric, monitoring the GDP-GDI gap can provide useful insights into the true strength of the economy and potential warning signs.[1][2][3][4][5]
Sources [1] GDP may paint a sunny picture of the economy, but this number tells ... https://www.usatoday.com/story/money/2023/12/01/gross-domestic-income-gdi-possible-recession/71746276007/ [2] What Does the Gap between GDP and GDI Signal for Investors? https://www.thornburg.com/article/what-does-the-gap-between-gdp-and-gdi-signal-for-investors/ [3] Better Measure of Output: GDP or GDI? https://www.stlouisfed.org/on-the-economy/2016/march/better-measurement-output-gdp-gdi [4] The Discrepancy Between Expenditure- and Income-Side Estimates ... https://www.clevelandfed.org/publications/economic-commentary/2023/ec-202301-discrepancy-between-expenditure-income-side-estimates-us-output [5] Making Sense of the GDP-GDI Gap (Abecasis) https://www.gspublishing.com/content/research/en/reports/2024/02/11/ac7608b8-0385-4e97-86e0-064e27858d79.html
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