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December 02, 2005

Gold-Price Adjusted, Were Still In A Recession
by Paul Kasriel

On the op-ed page of the December 1 edition of the WSJ, Michael Darda argues that the proper deflator when discussing real economic variables is the price of gold. I have great sympathy for his argument. And, as the chart below shows, if we use the price of gold as the deflator rather than the Commerce Department's deflator of chained 2000 dollars, it looks as though the U.S. economy still is in a recession despite the touted supply-side tax cuts we have had since 2001. Thanks for the tip, Mr. Darda!

Paul L. Kasriel, Director of Economic Research
The Northern Trust Company
Economic Research Department
Positive Economic Commentary
"The economics of what is, rather than what you might like it to be."
50 South LaSalle Street, Chicago, Illinois 60675

The information herein is based on sources which The Northern Trust Company believes to be reliable, but we cannot warrant its accuracy or completeness. Such information is subject to change and is not intended to influence your investment decisions.

Copyright © 2005-2008 The Northern Trust Company

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