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we the sheeple

What Does -5.6% Gdp Really Mean?

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I created a basic scenario below.

YearGoldilocksGDP with LostGDP (2.5% pa)crashpa changeGDP2001100.00100.002.50%0.002002102.50102.502.50%0.002003105.06105.062.50%0.002004107.69107.692.50%0.002005110.38110.382.50%0.002006113.14113.142.50%0.002007115.97115.972.50%0.002008118.87118.872.50%0.002009121.84121.84-5.60%0.002010124.89115.020.50%-9.872011128.01115.591.00%-22.292012131.21116.752.50%-36.752013134.49119.673.50%-51.572014137.85123.864.00%-65.562015141.30128.814.00%-78.052016144.83133.964.00%-88.922017148.45139.324.00%-98.052018152.16144.894.00%-105.322019155.97150.694.00%-110.602020159.87156.724.00%-113.742021163.86162.994.00%-114.622022167.96169.504.00%-113.072023172.16176.284.00%-108.952024176.46183.344.00%-102.072025180.87190.674.00%-92.272026185.39198.304.00%-79.372027190.03206.234.00%-63.172028194.78214.484.00%-43.482029199.65223.064.00%-20.072030204.64231.984.00%7.272031209.76241.262.50%38.772032215.00247.292.50%71.062033220.38253.472.50%104.152034225.89259.812.50%138.082035231.53266.302.50%172.852036237.32272.962.50%208.492037243.25279.792.50%245.02

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I created a basic scenario below.

YearGoldilocksGDP with LostGDP (2.5% pa)crashpa change GDP2001100.00100.002.50%0.002002102.50102.502.50%0.002003105.06105.062.50%0.002004107.69107.692.50%0.002005110.38110.382.50%0.002006113.14113.142.50%0.002007115.97115.972.50%0.002008118.87118.872.50%0.002009121.84121.84-5.60%0.002010124.89115.020.50%-9.872011128.01

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I created a basic scenario below.

YearGoldilocksGDP with LostGDP (2.5% pa)crash pa change GDP2001100.00100.002.50%0.002002102.50102.502.50%0.002003105.06105.062.50%0.002004107.69107.692.50%0.002005110.38110.382.50%0.002006113.14113.142.50%0.002007115.97115.972.50%0.002008118.87118.872.50%0.002009121.84121.84-5.60%0.002010124.89115.020.50%-9.872011128.01115.591.00%-22.292012131.21116.752.50%-36.752013134.49119.673.50%-51.572014137.85123.864.00%-65.562015141.30128.814.00%-78.052016144.83133.964.00%-88.922017148.45139.324.00%-98.052018152.16144.894.00%-105.322019155.97150.694.00%-110.602020159.87156.724.00%-113.742021163.86162.994.00%-114.622022167.96169.504.00%-113.072023172.16176.284.00%-108.952024176.46183.344.00%-102.072025180.87190.674.00%-92.272026185.39198.304.00%-79.372027190.03206.234.00%-63.172028194.78214.484.00%-43.482029199.65223.064.00%-20.072030204.64231.984.00%7.272031209.76241.262.50%38.772032215.00247.292.50%

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I created a basic scenario below.

YearGoldilocksGDP with LostGDP (2.5% pa)crash pa change GDP2001100.00100.002.50%0.002002102.50102.502.50%0.002003105.06105.062.50%0.002004107.69107.692.50%0.002005110.38110.382.50%0.002006113.14113.142.50%0.002007115.97115.972.50%0.002008118.87118.872.50%0.002009121.84121.84-5.60%0.002010124.89115.020.50%-9.872011128.01115.591.00%-22.292012131.21116.752.50%-36.752013134.49119.673.50%-51.572014137.85123.864.00%-65.562015141.30128.814.00%-78.052016144.83133.964.00%-88.922017148.45139.324.00%-98.052018152.16144.894.00%-105.322019155.97150.694.00%-110.602020159.87156.724.00%-113.742021163.86162.994.00%-114.622022167.96169.504.00%-113.072023172.16176.284.00%-108.952024176.46183.344.00%-102.072025180.87190.674.00%-92.272026185.39198.304.00%-79.372027190.03206.234.00%-63.172028194.78214.484.00%-43.482029199.65223.064.00%-20.072030204.64231.984.00%7.272031209.76241.262.50%38.772032215.00247.292.50%

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I created a basic scenario below.

YearGoldilocksGDP with LostGDP (2.5% pa)crash pa change GDP2001100.00100.002.50%0.002002102.50102.502.50%0.002003105.06105.062.50%0.002004107.69107.692.50%0.002005110.38110.382.50%0.002006113.14113.142.50%0.002007115.97115.972.50%0.002008118.87118.872.50%0.002009121.84121.84-5.60%0.002010124.89115.020.50%-9.872011128.01115.591.00%-22.292012131.21116.752.50%-36.752013134.49119.673.50%-51.572014137.85123.864.00%-65.562015141.30128.814.00%-78.052016144.83133.964.00%-88.922017148.45139.324.00%-98.052018152.16144.894.00%-105.322019155.97150.694.00%-110.602020159.87156.724.00%-113.742021163.86162.994.00%-114.622022167.96169.504.00%-113.072023172.16176.284.00%-108.952024176.46183.344.00%-102.072025180.87190.674.00%-92.272026185.39198.304.00%-79.372027190.03206.234.00%-63.172028194.78214.484.00%-43.482029199.65223.064.00%-20.072030204.64231.984.00%7.272031209.76241.262.50%38.772032215.00247.292.50%

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I created a basic scenario below.

Year Goldilocks GDP+ pa Lost

GDP (2.5% pa) crash change GDP

2001 100.00 100.00 2.50% 0.00

2002 102.50 102.50 2.50% 0.00

2003 105.06 105.06 2.50% 0.00

2004 107.69 107.69 2.50% 0.00

2005 110.38 110.38 2.50% 0.00

2006 113.14 113.14 2.50% 0.00

2007 115.97 115.97 2.50% 0.00

2008 118.87 118.87 2.50% 0.00

2009 121.84 121.84 -5.60% 0.00

2010 124.89 115.02 0.50% -9.87

2011 128.01 115.59 1.00% -22.29

2012 131.21 116.75 2.50% -36.75

2013 134.49 119.67 3.50% -51.57

2014 137.85 123.86 4.00% -65.56

2015 141.30 128.81 4.00% -78.05

2016 144.83 133.96 4.00% -88.92

2017 148.45 139.32 4.00% -98.05

2018 152.16 144.89 4.00% -105.32

2019 155.97 150.69 4.00% -110.60

2020 159.87 156.72 4.00% -113.74

2021 163.86 162.99 4.00% -114.62

2022 167.96 169.50 4.00% -113.07

2023 172.16 176.28 4.00% -108.95

2024 176.46 183.34 4.00% -102.07

2025 180.87 190.67 4.00% -92.27

2026 185.39 198.30 4.00% -79.37

2027 190.03 206.23 4.00% -63.17

2028 194.78 214.48 4.00% -43.48

2029 199.65 223.06 4.00% -20.07

2030 204.64 231.98 4.00% 7.27

2031 209.76 241.26 2.50% 38.77

2032 215.00 247.29 2.50% 71.06

2033 220.38 253.47 2.50% 104.15

2034 225.89 259.81 2.50% 138.08

2035 231.53 266.30 2.50% 172.85

2036 237.32 272.96 2.50% 208.49

2037 243.25 279.79 2.50% 245.02

2001 = 100

Column 1 = Year

Column 2 = Goldilocks Economy - Brown/Darling assume 2.5% increase in GDP forever.

Column 3 = Crash in 09 plus recovery. Then going at 4% until the lost GDP is made up (20 years later).

My point is, how can the 8% of lost GDP against previous projections cannot be recovered?

Edited by we the sheeple

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Come on, I've got a serious point.

This is a massive bite out of the GDP cake, which is in no way made up by stablisation and a conventional recovery.

Past and current Govt spending projections had been based on the good times going on forever.

Getting back to projected GDP levels will take 10 years with a wildly optimistic scenario.

Recovering the loss of GPD will take 20 years with the same optimistic scenario (+4% pa)

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One facet of human nature that I have seen played out many times is that people somehow always seem to adjust their lifestyle (expenses) to increases in income. In this country, it seems that we always spend 105% of what we make.

This trait is sustainable for as long as income (individually for sure but also collectively as measured by GDP) grows.

The real impact of a decrease in national income (GDP) comes from the fact that expenses become unsustainable rather than any considerations about where we have been or assumptions about where we are going.

As Keynes said, we are all dead in the long run. The critical impact of a decrease in GDP is the influence that it has on behaviour around the time that it occurs.

My opinion is that our collective past behaviour means that the current situation will be very hard to recover from in the next 5 to 10 years and will become self perpetuating.

Edited by LuckyOne

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Guest happy?
One facet of human nature that I have seen played out many times is that people somehow always seem to adjust their lifestyle (expenses) to increases in income. In this country, it seems that we always spend 105% of what we make.

This trait is sustainable for as long as income (individually for sure but also collectively as measured by GDP) grows.

The real impact of a decrease in national income (GDP) comes from the fact that expenses become unsustainable rather than any considerations about where we have been or assumptions about where we are going.

As Keynes said, we are all dead in the long run. The critical impact of a decrease in GDP is the influence that it has on behaviour around the time that it occurs.

My opinion is that our collective past behaviour means that the current situation will be very hard to recover from in the next 5 to 10 years and will become self perpetuating.

Although this site's testament to the idea that not everyone has been living beyond their means.

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Although this site's testament to the idea that not everyone has been living beyond their means.

Once every 20 to 30 years, wealth is transferred to those who have been prudent during asset bubbles.

I accept that I have been guilty of being too general but I do think that the prudent will be rewarded and the impudent will be punished in the next decade.

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Once every 20 to 30 years, wealth is transferred to those who have been prudent during asset bubbles.

I accept that I have been guilty of being too general but I do think that the prudent will be rewarded and the impudent will be punished in the next decade.

Luck has a lot to do with it.

By luck, I mean when you're born.

I was born mid-sixties and bought my first home in 1987, aged 22.

At 22 you tend to do what your friends of a similar age are doing. All my mates were buying houses

and so did I. It's difficult to break away from the herd mentality at this age.

Me and my mates were lucky because we got on the housing ladder when prices were affordable and we're all

sat on equity not because of our acumen in negotiating buying and selling houses but because we entered the market

at the right time 'cos we were born in the right decade.

Compare that to a 22 year old born in 1985 and a first time buyer in 2007.

I feel for them.

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I tried to figure out what GDP actually meant some time ago and how they work it out.

I gave up after 3 weeks.

It's one of those numbers that can mean pretty much whatever you want it to mean. Consumer spending down a bit? Don't worry, government can spend some of your taxes it hasn't yet stolen to cover it up. Exports f*cked up this quarter? Never mind, we imported less than we didn't export. Hoorah!!

It's just numbers. They don't mean very much at all.

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Luck has a lot to do with it.

By luck, I mean when you're born.

I was born mid-sixties and bought my first home in 1987, aged 22.

At 22 you tend to do what your friends of a similar age are doing. All my mates were buying houses

and so did I. It's difficult to break away from the herd mentality at this age.

Me and my mates were lucky because we got on the housing ladder when prices were affordable and we're all

sat on equity not because of our acumen in negotiating buying and selling houses but because we entered the market

at the right time 'cos we were born in the right decade.

Compare that to a 22 year old born in 1985 and a first time buyer in 2007.

I feel for them.

I agree completely which is why I chose my screen name.

I am very lucky to come from a gene and social pool that helped me immensely in addition to the good fortune that my demographic position grants me.

The challenge is to try to pass on my immense good fortune to my kids and (not yet!!) grandkids.

I don't see how high house prices will help me do this.

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-5.6 GDP = -14% Tax take = +14% Tax rise.

Don't you just love percentages. :rolleyes:

Edit for bad maths. :( -5.6 GDP = -5.6 Tax take = +14% Tax increase :rolleyes:

Edited by XswampyX

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