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Real GDP’s still growing at ~2% on trend

Summary:
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

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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.

Real GDP’s still growing at ~2% on trend

Source: BEA

Jared Bernstein
Jared Bernstein joined the Center on Budget and Policy Priorities in May 2011 as a Senior Fellow. From 2009 to 2011, Bernstein was the Chief Economist and Economic Adviser to Vice President Joe Biden, Executive Director of the White House Task Force on the Middle Class, and a member of President Obama’s economic team. Prior to joining the Obama administration, Bernstein was a senior economist and the director of the Living Standards Program at the Economic Policy Institute, and between 1995 and 1996, he held the post of Deputy Chief Economist at the U.S. Department of Labor.

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