“By integrating the vital role of the supply chain into national income accounting, Mark Skousen’s development of gross output (GO) has created a more dynamic and broader view of the economy, and of the central role that business plays in national income, the business cycle and economic growth. I recommend that economists seriously consider his new approach to macroeconomics.” — Finn Kydland, winner of the 2004 Nobel Prize in Economics
My Gross Output (GO) statistic came out today and it tells a very different story than GDP. While GDP continues to grow, GO hardly grew at all. Indeed, it is warning that a recession is coming our way.
Today, the federal government (the Bureau of Economic Analysis or BEA) also released fourth-quarter data which suggest that the Fed’s aggressive tight-money policy is working — price inflation is coming down. However, the report also suggests that we are headed into a recession in 2023.
While real gross domestic product (GDP) grew 2.6% in the fourth quarter, gross output (GO) — which measures spending at all stages of production — grew only by 1% or less. And business (B2B) spending actually declined 5% in real terms in the fourth quarter. (See the chart below.)
My studies show that whenever GO grows at a slower pace than GDP, it suggests a slowdown or recession is in the future.
Right now, the GO model is sending out warning signals: A Recession is Ahead!
The Fed’s anti-inflation policy has already engineered a bear market on Wall Street, and last month, we saw serious banking crisis. A recession is just around the corner in 2023.
But there is a silver lining in the BEA release. The GO price deflator shows price inflation in the supply chain almost coming to an end in the fourth-quarter. It was increasing at double-digit-percentage rates a year ago, but now it’s down to 0.5% in the fourth quarter of 2022.
What Every Investor Needs to Know About GO
Since writing “The Structure of Production” in 1990, I’ve urged economists to measure spending at all stages of production, including the all-important supply chain, rather than just gross domestic product (GDP), which measures final output only. (Copies of my book are available on Kindle for $16.50 or paperback for $28 on Amazon.)
In my mind, leaving out the supply chain is a major sin of omission. It’s larger than GDP itself!
Just as publicly-traded companies report a “top line” (sales/revenues) and a “bottom line” (profits) every quarter, so too should the economics profession report a top line and bottom line in national income accounting.
In April 2014, the enlightened staff at the BEA, led by Steven Landefeld, came to the same conclusion and began publishing GO, along with GDP, every quarter. The economics profession had finally caught up with the accounting and finance departments.
As Nobel-Prize-winning economist William Nordhaus, along with Harvard economist Dale Jorgensen and BEA director Steven Landefeld, wrote in their book “A New Architecture for U.S. National Accounts,” “Gross output [GO] is the natural measure of the production sector, while net output [GDP] is appropriate as a measure of welfare. Both are required in a complete system of accounts.”
What Does GO Tell Us?
What can GO tell us that GDP can’t? Here is a list:
Gross output (GO) is the new government statistic that measures total spending in the economy at all stages of production. Unlike GDP, it includes the value of the supply chain, which is larger than GDP itself.
GO is the missing piece in the macroeconomic puzzle. I like the way Steve Forbes puts it: “GDP is the x-ray of the economy; GO is the CAT scan.” I also suggest that GO is the “top line” in national income accounting; GDP is the bottom line. GO and GDP are complementary, but tell different stories.
GO and GDP don’t always move in the same direction. During downturns, GO tends to fall much more and recover much more quickly. In 2022, real GDP declined for two quarters, suggesting a recession, while real GO kept rising (indicating no recession). However, real GO is growing at a slower pace and may turn negative in 2023.
It shows that business spending is far bigger than consumer spending in the economy. Under the GDP model, consumer spending is the biggest sector and drives the economy. Under the GO model, business is the catalyst and driving factor of the economy. The GO model is more consistent with leading economic indicators and economic growth theory in the United States, as well as the supply side of the economy: saving, capital investment, entrepreneurship, innovation, etc.
GO, especially the supply chain, is proving to be a good leading indicator of what GDP will do in the next quarter. Private economist David Ranson, CEO of HCWE, Inc., uses it for effectively forecasting the next quarter’s GDP.
Investors on the GO
GO and the structure of economy is also useful to investors. The yield curve, a measure of the structure of interest rates, helps predict recessions and bear markets on Wall Street. It also shows why mining and energy stocks are more volatile than retail and utility stocks. I use this time-structural approach all the time in my investment newsletter. Several private investors use GO to forecast the markets and the economy, including David Ranson and Jerry Bowyer.
How to Learn More About GO
I’ve written extensively on the value of GO, including three articles in the Wall Street Journal as well as in Forbes magazine.
Several years ago, I was invited to give the Schumpeter Lecture on GO in Stockholm, Sweden. You can read it here: www.grossoutput.com.
Slowly but surely, GO is being integrated into the economics textbooks, such as McConnell Brue Flynn’s popular textbook, as well as my own “Economic Logic” (a sixth ed. is forthcoming).
I’ve given lectures at major universities on the topic, including Columbia Business School, the University of Virginia and Chapman University (where my presentation earned me a presidential fellowship and now the Doti-Spogli Endowed Chair).
Two months ago, Finn Kydland, who won the Nobel Prize for Economics in 2004, invited me to give a presentation at his Macro Workshop at the University of California at Santa Barbar. (See his quote at the beginning of this article.) I also gave a lecture before a large economics class taught by Professor Lanny Ebenstein, which was well received. One student is doing a paper on GO.
GO Takes on the Skeptics:‘The Economics of Life Made Simple’
It’s a triumph!
Skeptic magazine is published by Michael Shermer, a science author and libertarian who speaks every year at FreedomFest. It is a slick magazine with a broad audience (50,000-plus circulation). He invited me to give an overview of the U.S. and global economy, and the basics of Adam Smith’s economics. My article made the cover of the current (March) issue. It contains several important charts, including the economic freedom index.
Here are the questions I seek to answer:
What is the secret to the success of the capitalist nations, which have grown by leaps and bounds in the past 200 years?
What drives the economy — consumer spending, business investment or government stimulus?
Why are young people so attracted to democratic socialism, and is there a better alternative?
Should valuable goods and services like college education, medical services and transportation be made available to the public for “free”?
What is money, what is it based on without a gold standard and can cryptocurrencies ever replace it?
Are booms and busts and periods of inflation and recession (like we’re experiencing today) inevitable?
Do economists offer any solution to the global warming threat?
The article has a glossary, and it shows how I integrate gross output (GO) into economic analysis.
I even mention the possibility of a “monetary crisis” in 2023 — the one we are facing right now with the banking crisis.
To read my “Economics of Life Made Simple,” go to www.skeptic.com. It’s published four times a year. The price is $30, and it is available in print or online. You can also pick up a copy at any local Barnes & Noble bookstore.
LAST CALL: ‘Super Early Bird’ Discount on FreedomFest Ends Tomorrow, March 31!
You can save $150 over the retail price — but the discount ends on Friday, March 31 — tomorrow!
New Speakers at FreedomFest
I’m happy to announce that Enes Kanter Freedom, former NBA great for the Boston Celtics, will speak at FreedomFest, scheduled for July 12-15, in Memphis, Tennessee. He’s a major critic of the NBA’s and Lebron James’ failures to criticize China for human rights violations. His talk should not be missed!
Other exciting new speakers include Michael Oher, whose story was the focus of the movie “The Blind Side”, Winston Marshall, formerly of Mumford & Sons, Nadine Strossen of the ACLU and Doug Stanhope, our headlining libertarian comedian. We will have over 200 speakers this July… plus more than 180 exhibitors and freedom organizations. See the current list at www.freedomfest.com.
Special Note: We also have a high-profile CELEBRITY speaker but cannot reveal his name until May. You will definitely want to be at FreedomFest this year to hear him! Sign up now before the early bird discount ends.
Global Financial Summit Addresses the New Monetary Crisis
We have a great lineup of experts who will help you navigate the latest monetary crisis, including Jeremy Siegel, Burt Malkiel, Louis Navellier, Alexander Green, Addison Wiggins, Steve Forbes, George Gilder, Steve Moore, Art Laffer, John Fund and David Bahnsen. Plus, our own editors Jim Woods, Bryan Perry,Roger Michalski and Paul Dykewicz will also be there.
Special Discount Ends Tomorrow!
We’re expecting over 2,000 attendees at our big show this July. Our early bird discount ends tomorrow. We’ve arranged another $50 off the early-bird rate for my subscribers. All in all, you save $150 off the retail price. Use the code EAGLE50 and register at www.freedomfest.com, or call Hayley at 1-855-850-3733, ext. 201.
See you in Memphis in July!
Good investing, AEIOU,
Mark Skousen
You Blew It!
Our Cultural Decline After the Pandemic Hit
Many of us believe that our culture is in decline in terms of crime, honesty, community involvement, language, religion and having children.
Recently, a survey by the Wall Street Journal and a nonpartisan research organization at the University of Chicago has confirmed it.
In the data, we can see how imported trends have turned sharply negative in the past couple of years.
Since the pandemic of 2020, the percentage of Americans who rated the importance of these values as follows: patriotism is down down from 60% to 39%; religion is down from 45% to 39%; having children is down from 42% to 30% and community involvement is down from 60% to 23%. The only exception was making money, whose value went up from 40% to 45%. For the full report, go here.
All of this has occurred after the COVID-19 virus hit America. It is not a good sign!
Most people in the mainstream concede that the economy is heading for a recession, but the consensus seems to be that downturn will be short and shallow. Projections by the World Bank undercut that optimism.
According to the World Bank, global growth in 2023 will slow to the lowest level since the 2008 financial crisis.
In other words, the World Bank is predicting the beginning of Great Recession 2.0.
You might recall that the Great Recession was neither short nor shallow.
In fact, World Bank Group chief economist and senior vice president Indermit Gill said, “The world economy is in a precarious position.”
According to the World Bank’s new Global Economic Prospects report, global growth is projected to decelerate to 2.1% this year, falling from 3.1% in 2022. The bank forecasts a significant slowdown during the last half of this year.
That would match the global growth rate during the 2008 financial crisis.
According to the World Bank, higher interest rates, inflation, and more restrictive credit conditions will drive the economic downturn.
The report forecasts that growth in advanced economies will slow from 2.6% in 2022 to 0.7% this year and remain weak in 2024.
Emerging market economies will feel significant pain from the economic slowdown. Yahoo Finance reported, “Higher interest rates are a problem for emerging markets, which already were reeling from the overlapping shocks of the pandemic and the Russian invasion of Ukraine. They make it harder for those economies to service debt loans denominated in US dollars.”
The World Bank report paints a bleak picture.
The world economy remains hobbled. Besieged by high inflation, tight global financial markets, and record debt levels, many countries are simply growing poorer.”
Absent from the World Bank analysis is any mention of how more than a decade of artificially low interest rates and trillions of dollars in quantitative easing by central banks created the wave of inflation that continues to sweep the globe, along with massive levels of debt and all kinds of economic bubbles.
If you listen to the mainstream narrative, you would think inflation just came out of nowhere, and central banks are innocent victims nobly struggling to save the day by raising interest rates. Pundits fret about rising rates but never mention that rates were only so low for so long because of the actions of central banks. And they seem oblivious to the consequences of those policies.
But being oblivious doesn’t shield you from the impact of those consequences.
In reality, central banks and governments implemented policies intended to incentivize the accumulation of debt. They created trillions of dollars out of thin air and showered the world with stimulus, unleashing the inflation monster. And now they’re trying to battle the dragon they set loose by raising interest rates. This will inevitably pop the bubble they intentionally blew up. That’s why the World Bank is forecasting Great Recession-era growth. All of this was entirely predictable.
After all, artificially low interest rates are the mother’s milk of a global economy built on easy money and debt. When you take away the milk, the baby gets hungry. That’s what’s happening today. With interest rates rising, the bubbles are starting to pop.
And it’s probably going to be much worse than most people realize. There are more malinvestments, more debt, and more bubbles in the global economy today than there were in 2008. There is every reason to believe the bust will be much worse today than it was then.
In other words, you can strike “short” and “shallow” from your recession vocabulary.
DNAmFitAge: Biological age indicator incorporating physical fitness
“We expect DNAmFitAge will be a useful biomarker for quantifying fitness benefits at an epigenetic level and can be used to evaluate exercise-based interventions.”…
“We expect DNAmFitAge will be a useful biomarker for quantifying fitness benefits at an epigenetic level and can be used to evaluate exercise-based interventions.”
Credit: 2023 McGreevy et al.
“We expect DNAmFitAge will be a useful biomarker for quantifying fitness benefits at an epigenetic level and can be used to evaluate exercise-based interventions.”
BUFFALO, NY- June 7, 2023 – A new research paper was published inAging (listed by MEDLINE/PubMed as “Aging (Albany NY)” and “Aging-US” by Web of Science) Volume 15, Issue 10, entitled, “DNAmFitAge: biological age indicator incorporating physical fitness.”
Physical fitness is a well-known correlate of health and the aging process and DNA methylation (DNAm) data can capture aging via epigenetic clocks. However, current epigenetic clocks did not yet use measures of mobility, strength, lung, or endurance fitness in their construction.
In this new study, researchers Kristen M. McGreevy, Zsolt Radak, Ferenc Torma, Matyas Jokai, Ake T. Lu, Daniel W. Belsky, Alexandra Binder, Riccardo E. Marioni, Luigi Ferrucci, Ewelina Pośpiech, Wojciech Branicki, Andrzej Ossowski, Aneta Sitek, Magdalena Spólnicka, Laura M. Raffield, Alex P. Reiner, Simon Cox, Michael Kobor, David L. Corcoran, and Steve Horvath from the University of California Los Angeles, University of Physical Education, Altos Labs, Columbia University Mailman School of Public Health, University of Hawaii, University of Edinburgh, National Institute on Aging, Jagiellonian University, Pomeranian Medical University in Szczecin, University of Łódź, Central Forensic Laboratory of the Police in Warsaw, Poland, University of North Carolina at Chapel Hill, University of Washington, and University of British Columbia develop blood-based DNAm biomarkers for fitness parameters including gait speed (walking speed), maximum handgrip strength, forced expiratory volume in one second (FEV1), and maximal oxygen uptake (VO2max) which have modest correlation with fitness parameters in five large-scale validation datasets (average r between 0.16–0.48).
“These parameters were chosen because handgrip strength and VO2max provide insight into the two main categories of fitness: strength and endurance [23], and gait speed and FEV1 provide insight into fitness-related organ function: mobility and lung function [8, 24].”
The researchers then used these DNAm fitness parameter biomarkers with DNAmGrimAge, a DNAm mortality risk estimate, to construct DNAmFitAge, a new biological age indicator that incorporates physical fitness. DNAmFitAge was associated with low-intermediate physical activity levels across validation datasets (p = 6.4E-13), and younger/fitter DNAmFitAge corresponds to stronger DNAm fitness parameters in both males and females.
DNAmFitAge was lower (p = 0.046) and DNAmVO2max is higher (p = 0.023) in male body builders compared to controls. Physically fit people had a younger DNAmFitAge and experienced better age-related outcomes: lower mortality risk (p = 7.2E-51), coronary heart disease risk (p = 2.6E-8), and increased disease-free status (p = 1.1E-7). These new DNAm biomarkers provide researchers a new method to incorporate physical fitness into epigenetic clocks.
“Our newly constructed DNAm biomarkers and DNAmFitAge provide researchers and physicians a new method to incorporate physical fitness into epigenetic clocks and emphasizes the effect lifestyle has on the aging methylome.”
Read the full study: DOI:https://doi.org/10.18632/aging.204538
Corresponding Authors: Kristen M. McGreevy, Zsolt Radak, Steve Horvath
Keywords: epigenetics, aging, physical fitness, biological age, DNA methylation
Sign up for free Altmetric alerts about this article: https://aging.altmetric.com/details/email_updates?id=10.18632%2Faging.204538
About Aging-US:
Launched in 2009, Aging publishes papers of general interest and biological significance in all fields of aging research and age-related diseases, including cancer—and now, with a special focus on COVID-19 vulnerability as an age-dependent syndrome. Topics in Aging go beyond traditional gerontology, including, but not limited to, cellular and molecular biology, human age-related diseases, pathology in model organisms, signal transduction pathways (e.g., p53, sirtuins, and PI-3K/AKT/mTOR, among others), and approaches to modulating these signaling pathways.
Please visit our website at www.Aging-US.com and connect with us:
Lifestyle icon Martha Stewart has been on a roll when it comes to representing vivacious women over 60. Whether she's teaming up to charm audiences alongside her BFF Snoop Dogg, poking fun at Elon Musk, or starring as Sports Illustrated's Swimsuit Issue cover model, Martha stays busy.
Her most recent publicity moment, however, doesn't have the same wholesome feeling Stewart brings to the table. In an interview with Footwear News, the DIY-queen had some choice words about Americans who want to continue working from home after covid-19 lockdown shut down offices.
“You can’t possibly get everything done working three days a week in the office and two days remotely," the cozy-home guru said. "Look at the success of France with their stupid … you know, off for August, blah blah blah. That’s not a very thriving country. Should America go down the drain because people don’t want to go back to work?”
Well, that's certainly a viewpoint. A lot to unpack there. Many online were confused--after all, didn't Stewart basically make her career by "working from home?"
Sitting down with The Today Show, Stewart elaborated on her controversial stance. It seems she's confusing "work from home" with a three-day workweek.
"I'm having this argument with so many people these days. It's just that my kind of work is very creative and is very collaborative. And I cannot really stomach another zoom. [...But] I hate going to an office, it's empty. During COVID I took every precaution. We [...] set up an office at [...] my home[...] Now we're our offices and our three day work week, I just don't agree with it," Stewart tells viewers.
"It's frightening because if you read the economic news and look at what's happening everywhere in the world, a three-day workweek doesn't get the work done, doesn't get the productivity up. It doesn't help with the economy and I think that's very important."
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