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Home Publications Blogs Beat the Press NYT Misreports European Growth

NYT Misreports European Growth

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Friday, 13 May 2011 05:31

The NYT told readers:

"The Federal Statistics Office in Germany reported on Friday that gross domestic product grew 1.5 percent over the previous quarter, when harsh winter weather had held growth to just 0.4 percent."

Let's see, GDP growth in the United States was 1.8 percent in the first quarter, so I guess we're doing a bit better than Germany at this point.

Wrong!!!! The growth figure reported by in this article is a quarterly rate of growth. The annual rate of growth in Germany in the first quarter was a very solid 6.1 percent.

It is difficult to understand why the media insist on reporting quarterly rates of growth when the standard in the United States is to report GDP growth as an annual rate. Often it is not even clear that the growth being reported is a quarterly rate. For example, later in this piece the NYT tells us:

"France, too, surpassed expectations with growth of 1 percent, the steepest increase since spring 2006, according to the statistics office Insee in Paris. That compared to an increase of just 0.3 percent in the last quarter of 2010, and a median forecast of economists surveyed by Reuters and Bloomberg News of 0.6 percent."

This is like reporting the temperature in a European country as being 20 degrees without bothering to tell readers that this is the temperature measured on the Centigrade system. Presumably the point of this article is to convey information to readers. If we want to let people in the United States know how hot it is in France then the proper way to do this is to convert the Centigrade measure into a Fahrenheit measure.

If the point is to let people in the United States know how fast Germany and France are growing then the growth rates should be reported as annual rates. It's that simple.

[Addendum: I corrected the German growth figure from 4.9 percent that I had gotten from a Wall Street Journal article. What I took to be an annual rate of growth for the first quarter was in fact a year over year rate of growth. Stefan Karlsson had the correct number.]

Comments (3)Add Comment
...
written by economic layman, May 13, 2011 12:45
So did NPR's Morning Edition.
...
written by JDM, May 13, 2011 2:27
These things are so simple to understand you have to think it's deliberate. The alternative -- that they're all just incredibly stupid -- isn't any better.
The 4.9% number
written by Stefan Karlsson, May 14, 2011 6:09
Actually Dean, both the 1.5% and the 4.9% numbers for Germany are seasonally adjusted. It's just that 4.9% represented the change between Q1 2010 and Q1 2011 and that the 1.5% number represented the change between Q4 2010 and Q1 2011. 4.9% is the yearly change, 1.5% the quarterly change

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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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