Should The Eurozone Be Mourning or Celebrating Its 0.3 Percent Growth in the Second Quarter?

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Thursday, 15 August 2013 04:52

That's a good question, but this Washington Post article probably won't help people answer it. A 0.3 percent growth rate sounds depressingly close to zero, but in fact this number refers to the quarterly growth, not the annual growth rate, which is the standard way of reporting growth numbers in the United States.

This one should be really simple. GDP growth data in the U.S. is always reported as an annual rate. Did anyone see a report that the U.S. economy grew 0.4 percent in the second quarter? Multiplying by four will quickly transform these quarterly growth numbers into annual rates. (Okay, to be precise you want to take the growth to the fourth power, as in 1.003^4.) There is no excuse for not reporting GDP growth numbers in a way that would make their meaning clear to most readers.

FWIW, I can't tell you whether the euro zone should be happy or mourning its 1.2 percent growth rate in the second quarter. Given the severity of its downturn, it's not much of a bounceback. On the other hand, it is certainly better than seeing another fall in output.