Former Marine turned buy-side equity analyst parsing reality from wikialityOne note from today’s data on deflation. The headline in the Wall Street Journal says China grew at 6.1% last quarter. That doesn’t sound bad. But what was not in the story is that nominal growth was just 3.7%. The other 2.4% was because of deflation. To get real (after-inflation) growth you subtract inflation and/or add deflation. Growth in China is slowing down more than the headlines suggest.
Since when does real GDP growth count only in an inflationary environment? If economic activity remains constant in a deflationary environment, real GDP should be flat not negative.
