The big difference between GDP and GVA

The big difference is the price index.

I took nominal GDP and divided it by real GDP to get the deflator, the GDP price index.

I did the same with nominal and real Gross Value Added to get a GVA price index.

And then I went back to the list of data I usually use for labor productivity and figured the same for business sector output and for nonfarm business sector output: nominal relative to real.

I got a graph with four lines:

Graph #1

The highest line, blue, my calc for the GDP Deflator.

The highest line shows the most price increase. The lowest line (red) shows the least price increase.

Red is my calc for the GVA price index (for Nonfinancial Corporate Business, NFB  NCB). Nominal relative to real. I indexed these lines, all four of em, where they start (1947/01/01) so I can see how they change as the years go by. (By default they are indexed near the end of the series (presently 2012) so they all meet in that year, run very close for a decade or more before and after that date, and show their differences in the early years, which I think is bullshit.)

The two lines in the middle: Green is the business sector price index. Purple is the nonfarm business sector price index.

Not shown: The Consumer Price Index, which runs higher than the blue line, and the PCE Price Index, which runs close to the blue. (I didn't check that today, but it's what I remember from when I did check it.) Not sure why the consumers' "basket of goods" always inflates more than the business basket does. Not even sure the "basket of goods" description applies to anybody but consumers.

Hey -- if consumer inflation always runs high, and business inflation low, shouldn't "cost of living adjustments" be higher for consumers than for businesses? Seems to me. If inflation is 2% we should get 3%  wage hikes and they should get 1% price hikes. Yeah.

This is the first time I've looked at the GVA price index. It certainly is lower than the GDP deflator. Ah yeah, they probably hold their prices down by holding wages down. One hand slaps the other.