GDP progress in the USA is all the time reported as an annual price. Because of this if the economic system grew 0.5 % from the primary quarter to the second quarter, it will be universally reported as 2.0 % progress, with reporters all the time giving the annual price. That is mainly 4 instances the quarterly price. (It’s really the primary quarter’s progress price taken to the fourth energy, however this would be the similar for small numbers.)
This can be a easy and apparent level. It’s not one thing that’s debated amongst reporters or economists, it’s simply a typical that has turn out to be universally accepted.
Many different international locations don’t report their progress numbers as annual charges. They report 1 / 4’s progress quantity at a quarterly price. That’s wonderful, there may be nothing that makes using an annual price higher, the purpose is that everybody ought to know that the quantity is being reported as a quarterly price, if that’s the case.
I’ve usually railed at information tales which have reported one other nation’s progress quantity, with out telling readers that it’s a quarterly price. That clearly provides a really distorted image.
Fareed Zakaria dedicated this sin immediately in a Washington Put up column that informed folks that China’s economic system is caught in a rut. Zakaria informed readers:
“China’s economic system is in dangerous form. Financial progress final quarter got here in at 0.8 %, placing China vulnerable to lacking the authorities’s goal for the yr.”
Since Zakaria did give a hyperlink for his progress determine it was straightforward to click on by way of and see that the 0.8 % determine was in reality a quarterly progress price. This interprets right into a 3.2 % annual price. Zakaria is correct that this progress price is a disappointment for China, however a 3.2 % price may be very completely different from a 0.8 % price.
I’m positive Zakaria is nicely conscious of the excellence between a quarterly progress price and an annual price. I’m additionally positive he wouldn’t have made this type of mistake on goal. He might have made his level simply wonderful utilizing the precise quantity.
However it does mirror extraordinary sloppiness on Zakaria’s half, in addition to the Put up’s proofreading system, that this error was not caught earlier than it discovered its method into print. I’d hope that the Put up would appropriate it, however I do know that the Put up’s opinion editors don’t care about correcting errors.
This piece first appeared on Dean Baker’s Beat the Press weblog.
