Now that so much is written about the depth of the decline expected for the Spanish economy this year, I remember issues such as “It is necessary to reduce the gap between economic reality (improvement) and citizen perception (appreciates setbacks).” GDP does not it is sufficiently expressive of the well-being of the people. The quality of health, education or the environment are left out “So what is to be done?
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The perception of improvement and measuring other aspects that concern citizens and that are not measured by GDP and other economic indicators (David [email protected]_cano_m) And I add: the same happens with real inflation and official inflation. Incidentally, food prices have risen by more than 20% in large stores in recent months. Myths outside, myths that die expired, absorbed by the new times. Two years ago (2) Alex T., a London analyst, told me that “inflation and GDP have become myths, because today’s inflation and GDP are not yesterday’s and, surely, will not be those of Tomorrow, due to the change of actors in the Global Economy, now increasingly dependent on continuous technological advances, inflation and GDP, which are currently given an extreme role in deciding less ultra-lax monetary measures. .. “
“Before the pandemic, which has shattered all models, during the election campaign, Trump and some of his collaborators claimed that they could accelerate the economy to a real GDP growth rate of 3.5-4.0%. In his opinion from John Greenwood, chief economist at Invesco, that expectation was always unreasonable. “Growth of 2.0-2.5% seems likely for 2018 and as a longer-term trend, even as Trump implements tax cuts on Income and Proposed Corporations The interesting question, which baffles many central banks, academics and investment banking economists, is why inflation has remained so contained for so long – after all, unemployment it has fallen and the difference between observed GDP and potential has narrowed, which implies – in the opinion of many economists – that the margin available to absorb an increase in spending is narrow … “
“According to this analysis of the Phillips curve, inflation should already rise faster. However, according to the underlying Personal Consumption Spending Index (PCE), inflation has consistently remained below the Fed’s 2% target over 105 months of the 109 inflation data published since October 2008. Furthermore, three of the four most common parameters for measuring core inflation (the core PCE, the core CPI, and the CPI of the Cleveland Reserve Bank – Cleveland Fed Trimmed-Mean CPI-) are currently below 2%, and only the CPI of the Reserve Bank of Atlanta exceeds 2% … “
“For this, and more, the central banks must therefore review their models and update them. There is more. A few weeks ago the news (already old in other parts and homes of the old and new Continent) that the Kingdom United detects more than 2,500 products that have reduced their size, but not their price: 2,529 products, most within the food and beverage category, have reduced their size since 2012 without lowering prices, according to a study by the Office National Statistics Office (ONS), which questions the impact of ‘Brexit’ or the evolution of the price of raw materials on business decisions … “
“On the contrary, the study finds that in the same period of time only 614 products have registered an increase in size without this increase leading to a higher price. This phenomenon, known as ‘shrinkflation’, seems to have not had a Particularly notable impact on the evolution of inflation, indicates the British statistical office, with the exception of the subcategory of sugars, jams, chocolates and sweets, where since 2012 the reduction in the size of products has contributed to the increase in prices by 1, 22 percentage points … “
But this Letter is memory, immediate past, but past. The pandemic has destroyed everything and more
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Moisés Romero-Lacarteradelabolsa
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