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Monday, December 29, 2014

'Data Insight: Which Growth Rate? It’s a Weighty Subject'

Richard Crump, Stefano Eusepi, David Lucca, and Emanuel Moench at the NY Fed's Liberty Street Economics:

Data Insight: Which Growth Rate? It’s a Weighty Subject:  The growth rate in real gross domestic product (GDP) is a conventional indicator of the economy’s health. But the two ways of measuring annual GDP growth can give very different answers. In 2013, GDP grew 2.2 percent on a year-over-year basis, but at a faster 3.1 percent rate on a Q4-over-Q4 basis. So, which measure is more meaningful? We show in this post that the Q4/Q4 metric is better since it only considers quarterly growth rates during the current year, while the Year/Year measure depends on quarterly growth rates in both the current and previous year and puts considerable weight on growth around the turn of the year. ...

    Posted by on Monday, December 29, 2014 at 10:53 AM in Economics | Permalink  Comments (1)


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