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Home Publications Blogs Beat the Press Washington Post Gets Carried Away on Revised Third Quarter GDP Report

Washington Post Gets Carried Away on Revised Third Quarter GDP Report

Saturday, 21 December 2013 08:41

The Commerce Department released its second revision to the third quarter GDP numbers on Friday. It showed the economy growing 4.1 percent, which was better than the earlier reports and more than most analysts had expected. However, the Post got more than a bit carried away on this one, telling readers in the second sentence of its article on the report:

"The Commerce Department reported that the nation’s gross domestic product grew at a 4.1 percent annual rate during the third quarter — the best showing since 1992."

Really? How about the 4.9 percent growth rate in the fourth quarter of 2011, less than two years ago? Then we had a 4.9 percent growth rate in the first quarter of 2006 and a 4.5 percent growth rate in the first quarter of 2005. In total I find 17 quarters since 1992 with growth rates higher than 4.1 percent. So that one seems a bit off.

Furthermore, as the article notes in passing, most of the better than expected performance was due to inventory accumulations which added 1.7 percentage points to the growth reported for the quarter. The economy reportedly accumulated inventories at annual rate of $115.7 billion in the third quarter, an absolute pace exceeded only by the $116.2 billion rate in the third quarter of 2011. In the fourth quarter, if the economy adds inventories at the same rate as it did in the prior two years, and the rest of the economy grows at the same pace as it did in the third quarter, then the growth rate will be less than 1.0 percent.

Comments (1)Add Comment
I get it ...
written by Squeezed Turnip, December 21, 2013 9:40
WaPo continues to spread the gospel of Voodoonomics and Saint Reagan, anything good that happened after 1992 is a figment of your deluded imagination. These are not the droids you are looking for, Dean. May the Force (of bullshit) be with you.

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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.