May
2nd
Sat
2nd
GDP Growth Numbers
Finally someone explains how all these inconsistent GDP growth number are calculated …
The famous 6.1% contraction of the US economy is actually how much the economy would shrink if it continued to decrease for a year at the same pace as the last quarter did compared to the previous quarter.
That looks like a bogus number to me, because it overestimates the actual change over a full year. If the economy keeps decreasing for another two quarters at the same pace as Q4 2008 vs Q3 2008 and Q1 2009 vs Q4 2008, then the economy will actually shrink approximately 6%.
This methodology was probably promoted by some government to boost higher growth rates (just multiply by 4 the last quarter growth!), but now it’s biting back …
