That’s true (analogy - you can find out how much the clothes you’re wearing weigh by weighing each piece individually or weighing yourself wearing them and subtracting your weight).
But you can’t change the process mid way through your measurement. We don’t have a way of measuring “consumption of domestic products” so we just measure consumption and subtract the imports afterwards.
X-M is an accounting trick, but when you’re using this model you have to stick with it.
The idea that imports were deferred causes this accounting trick to show its weakness. (Presumably, looking at the data for all of 2025 when it’s available will “low pass” the deferred imports)
I'm not sure I understand. What process is changing? The "accounting trick" doesn't stop working.
Let's try a very simple example of buying all our inventory in one quarter and selling it in another - what is supposedly behind our GDP woes.
Let's say in Q1, the only spending was on $1 trillion of imports into private inventories, thus: I=$1 trillion, C=$0, G=$0, X=$0, M=$1 trillion. That gives us a GDP of $0.
Next quarter, flush with product there's no need to import anymore and the entire inventory is somehow sold domestically, thus: I=-$1 trillion, C=$1 trillion, G=$0, X=$0, M=$0. That gives us again, a GDP of $0.
Yet articles claim that the GDP in Q2 would be higher due to the drop in imports and was reduced in Q1 due to an increase in imports.
Don't you always measure GDP using spending (for convince / accuracy of price) so if you import $1 trillion and don't sell it then the GDP is $-1 trillion?
So Q1 is $-1 trillion and Q2 is $1 trillion?
IIRC, Investment is more of I bought machinery to make socks not I have 100 nintendo switches.
> (analogy - you can find out how much the clothes you’re wearing weigh by weighing each piece individually or weighing yourself wearing them and subtracting your weight)
damn, my clothes are heavy, because I know how much I weigh.
But you can’t change the process mid way through your measurement. We don’t have a way of measuring “consumption of domestic products” so we just measure consumption and subtract the imports afterwards.
X-M is an accounting trick, but when you’re using this model you have to stick with it.
The idea that imports were deferred causes this accounting trick to show its weakness. (Presumably, looking at the data for all of 2025 when it’s available will “low pass” the deferred imports)