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Home Publications Blogs Beat the Press It Doesn't Make Sense to Say GDP Growth Doubled in the Third Quarter

It Doesn't Make Sense to Say GDP Growth Doubled in the Third Quarter

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Wednesday, 02 November 2011 05:03

A top of the hour Morning Edition news segment told listeners that GDP growth nearly doubled from the second quarter to the third quarter, going from 1.3 percent to 2.5 percent. This is not a useful comparison.

The relevant comparison would be the percentage point change in the growth rate. For example, an increase in growth from 3.0 percent to 5.0 percent is far more meaningful than the rise from the first quarter to the second quarter, even though it is a near-doubling of the growth rate. When growth is slow, an increase that is large measured as a percent of the prior quarter's growth is not a big deal.

Comments (5)Add Comment
NPR Causes Road Rage on Beltway
written by Paul, November 02, 2011 8:55
Ever wonder why there are so many inexplicable accidents on the Beltway weekday mornings? Drivers should stop listening to NPR's propaganda reports and tune into the Jazz and Justice station: 89.3.

Either that or develop safer driving habits like texting.
...
written by freebird, November 02, 2011 9:36
and going from -1.3% to -2.5% would be a slightly different story even though the "growth nearly doubled" part would look exactly the same.
Take an intro to finance course, Dean....
written by pete, November 02, 2011 11:19
A 1% increase from 1 to 2 lowers the time to doubling GDP from 70 to 35 years or so. A 1% increase from 4% to 5% lowers the time to double from 18 to 15 years or so. A marginal, almost insignificant improvement. Doubling the rate is significant anytime. Adding a % or 2 matters more the lower the rate. Sorry.
@pete
written by J, November 02, 2011 7:50
So if we went from a 0.1% rate to a 1% rate between quarters, it makes sense to crow about growth being 10 times the month before? or if it went from -0.1% to 1%: negative 10 times? Silly.
...
written by pete, November 02, 2011 8:16
Excuuuse me...doubling when rates are positive. Einstein thought that compound interest was fascinating. Do the math.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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