Summary of November 8, 1995, meeting  (speaker's comments)...

* Michael Englund, Vice President of MMS International, Standard and
Poor's, discussed, The New Chain-Weighted GDP Index,at the Roundtable on
November 8th. Michael said "The wisdom of using limited resources at the
Commerce Department to inflict upon the business community a complicated
aleration in the widely used GDP data is unclear at best."
He stated that new data are theoretically superior to the old figures
because they eliminate a bias. The old fixed-weighted indexes of GDP have
over-stated growth in real spending on goods whose relative price has
declined since the base year, such as computers. This has artificially
boosted growth in real GDP as reported by the media.
The purpose of the new measure is to more accurately display the growth
rates of real gross national product and its components. See his summary
table below:

Time          Fixed-weighted          Chain-weighted
Period          (Old) GDP               (New) GDP
1990                1.2%                1.2%
1991                -0.6%               -0.7%
1992                2.3%                2.1%
1993                3.1%                2.5%
1994                4.1%                3.6%
1995 est            3.4%                2.6%

Source: Michael Englund's presentation to Silicon Valley Roundtable.