Stop talking about “real” demand

(A follow-up to yesterday’s post.)

Here’s Matt Yglesias:

This is not showing “demand”. Aggregate demand is a nominal concept, or it is meaningless. Back around 2008, real domestic final sales declined in Zimbabwe even as aggregate demand grew more than a million-fold.

This sort of graph merely shows quantity bought and sold. It says nothing about demand.



10 Responses to “Stop talking about “real” demand”

  1. Gravatar of Harry Harry
    28. January 2022 at 16:26

    This is very true. And now that you finally admit the American economy is all but dead – mostly due to the incompetence of the globalist left – will you now finally admit that the CCP is a tyrannical shit hole that has transformed itself into an orwellian dystopia?

    Or will you cower in fear, because you are concerned about them freezing your Chinese assets?

  2. Gravatar of ssumner ssumner
    28. January 2022 at 18:47

    “will you now finally admit that the CCP is a tyrannical shit hole that has transformed itself into an orwellian dystopia?”


  3. Gravatar of nick nick
    28. January 2022 at 21:42


    The Schwab/Sumner globalists are shaking in their boots, and little scrawny commie hands gettin sweaty, as the real hard working blue collar men descend on Ottawa.

    Take the path of the scrawny commie, tech and biosecurity state, propagated by the economists and other dotards in Academia.

    Or side with the blue collar freedom loving studs!

    The choice should be clear!

    Keep on trucking!

  4. Gravatar of Luc Newell Mennet Luc Newell Mennet
    29. January 2022 at 00:39

    Saying this graph demonstrates “demand” seems rather strange to me, considering you could make these numbers do this exact thing simply with supply side phenomena, were and are very much a thing in the pandemic. If demand is outpacing supply, this graph would not show that very well, nor would it show, say, demand and supply both falling together. Not to suggest that the changes in sales figures across industries were entirely due to supply side issues, but of all the ways to try and find “real AD” this doesn’t seem to even come close. Maybe I’m just in micro/edge-case brain mode and am overthinking it.

  5. Gravatar of ssumner ssumner
    29. January 2022 at 09:10

    Luc, Yes, that is exactly my point. I cite an example in the previous post as well. I don’t know why people keep doing this.

  6. Gravatar of Henry Henry
    29. January 2022 at 15:11

    Look at him run, lol.

    Folks, it doesn’t take much to remove a tyrant. History has shown that if you show up in large enough numbers they simply run away – most often without any fight whatsoever. There is a lot of “tough talk”, and brinkmanship, but when you begin to organize they run for the hills.

    Keep that in mind as the western economies move towards the CCP idealogy.

    You can end the tyrannical mandates, the outsourcing of your jobs and the sale of your countries assets to China tomorrow. It only takes showing up in large numbers.

    There are millions of canadians at the capital, so I suspect he’ll be hiding for a while.

    Look for the mainstream media to make up stories about how he has covid, or how he’s on business, or another strange excuse.

    We all know the truth!

  7. Gravatar of Rinat Rinat
    29. January 2022 at 15:46

    Another example of the left attempting to control your risk

    At some point, there must be consequences for academic petty tyrants who tell everyone else what is and is not permissible, determined invariably upon some arbitrary definition of risk. The mechanization of society, and the effort to create a new bizarre formula where science = policy, and subsequently where is=ought, is totally and utterly stupid. Ethics & philosophy is not that simple.

    In regards to the post itself, this economist again has absolutely no idea what he’s talking about. When your shelves are empty; when your wages are declining or stagnating; and when you find yourself with less purchasing power than your parents, then it should be obvious that “economic theory” is wrong. Don’t go along with the group-think. It will only end in your demise.

    Sumner’s response is always the same: “But Ricard told me”, But…But…But Ricardo. But what about Ricardo, but hold on lets talk about Ricardo, like Ricardo….

    Ricardo was wrong! Get over it! And start anew.

  8. Gravatar of Ankh Ankh
    30. January 2022 at 11:17

    Washington Post says Trudeau should ‘confront the fascists’.

    I must have been asleep in my history class, because I don’t remember Nazi Germany honking horns, playing music, and humbly requesting that government respect their autonomy.

    Is this another one of those leftward American delusions such as “Russia bad”, “conservative bad” or some other unavowed conspiracy like “white privilege or white man bad”, or are Americans really this stupid?

    Thai’s know you are brainwashed, but is it possible that you also suffer from really low IQ’s?

    Sorry, but I am truly shocked that Americans STILL cannot see through the massive propaganda. Your country was founded on the basis of small government and individual rights. Stop and look around you. Do you have small government? Do you have liberty? When a national newspaper says peaceful protesters are fascist, and a violent mob burning buildings is peaceful, then clearly you are no longer living in a free country.

    Get your head out of your ass before the CCP takes over. The last thing anyone in Southeast Asia wants is Chinese overlords. Nobody here believes in the big bad white man narrative. Black tourists are much more disrespectful AND racist than whites.

    So be a man, and take your country back.

  9. Gravatar of TravisV TravisV
    2. February 2022 at 06:19

    Prof. Sumner,

    Yglesias understands everything you just wrote above. You know it and I know it.

    Yglesias just wasn’t thorough enough with what he was saying. Which is that management of NGDP has been relatively stable. It’s lurking in the background. As a result, RGDP has been relatively stable.

    This is why the recovery from COVID has been to quick. The Fed brought NGDP back to the original trend line far, far more aggressively in 2020/21 than it did in 2008/09.

  10. Gravatar of ssumner ssumner
    2. February 2022 at 09:59

    Travis, Yes, although NGDP has recently been too strong.

    My criticism of the graph was focused more on the PIIE (which did the graph) than on Yglesias. He probably would have preferred a nominal GDP graph.

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