Real GDPs still growing at ~2% on trend

September 30, 2017
mm

Here are the facts behind my tweet from earlier, on a point to which Dean Baker and I both objected. In an NYT oped from this AM, columnist Bret Stephens stated, “…the economy is finally growing above the 3 percent mark.”

Nope (though, otherwise, I thought Stephens made a good point about contemporary R’s prowess in ginning up anger and winning elections, only to reveal deep incompetence and non-representativeness re governance). 

Stephens was misled by the 3.1% real GDP growth rate in the last quarter (2017q2). But that’s an annualized, quarterly growth rate. Such measures are noisy and volatile. In q1 by that metric, GDP went up only 1.2%, but if conservative pundits raised an eyebrow over that number, I missed it.

For a clearer signal of the underlying trend, it’s better to use the year-over-year numbers (see figure below). For the last three quarters, those values have been 1.8, 2.0, and 2.2 percent. So, perhaps a bit of acceleration, but nothing that alters this conclusion: real GDP is flitting about the 2% trend in the figure.I don’t expect the punditry to have Ph.D.’s in statistics, but everyone who writes in this area should know not to declare victory (or defeat) over one period’s noisy measure.

Source: BEA

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