More on the state of the economy from Justin Wolfers:
The New GDP Data Is Bad. The Hidden Data Behind It Is Worse, by Justin Wolfers: This morning the Bureau of Economic Analysis (BEA) released its latest estimates of GDP. And there’s bad news, hidden in the details. Most analysts are focused on the fact that GDP growth in the first quarter of this year was unrevised, remaining at 1.8%. But they’re focused on the wrong number.
National accounting aficionados know that hidden beneath the headline number is an alternative estimate of GDP. This alternative is often called GDP(I), because it is based on income data, rather than spending data. And GDP(I) is actually a more reliable estimate. Unfortunately, this more accurate indicator tells us that GDP grew by only 1.2%. That’s bad news.
In fact, this alternative indicator says that GDP is still below its level from late 2006. ... Okun’s Law tells us growth needs to exceed 3% before the unemployment rate will decline.
Rebecca Wilder has more on the report.