Kevin Hassett

And they say, well, that we use, when we're making our deflators, we use something called a match model approach.

And so if something, we sold it yesterday and we're selling it today, then that's like, we look at the price change for that and that's where we get our deflator.

And we don't change the bundle of things that we use the batch model approach for very often.

And it turns out that there were a lot of, there was at that point a lot of communications equipment produced in the US for developing countries that were kind of like really old fashioned analog things where you got like Josephine moving the wires and stuff to connect the phone calls.

And since we had this really old equipment that we were exporting,

to developing countries, they were using the price of that to deflate communications equipment.

It sounds like a very tactical matter, but then Chairman Greenspan said, well, Kevin, what if we deflate communications equipment with a computer deflator instead?

Like, how much more would GDP be going up?

And it was like about 1.5%.

because of that.

And so he was kind of like, yeah, we're really growing way more than we think.

We've got a serious measurement problem.

And then if you extrapolate from that, then if you're hedonically adjusting everything that gets like a computer to make it better, then you're putting like a deflationary force into the economy that's not being measured.

And so I think that it could be that the communications story was a key moment where, you know, everybody at the board had a, aha, yeah, I can understand why Alan is so convinced about this.

No, I was the business fixed investment person.

Economic activity.

No, that's the only one.

Well, that was my area, right, is capital spending and taxes and business investment.

The weight of GDP.

Right.