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» Real GDP growth: How did the 2005Q3 rank? from William J. Polley
Is 4.3% growth of real GDP just ok, or is it _______ (use whatever superlative you like)? One of my frequent commenters, spencer, writes in response to my earlier post that since WWII real GDP growth has exceeded 5% almost... [Read More]
» Grading Real GDP Growth from voluntaryXchange
This morning finalization of real GDP growth in the 3rd quarter at 4.1% means the economy still grades out at a B (using a reasonable grading scale), or an A using the scale representative of grading on American college campuses. [Read More]
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Since WW II the average quarterly growth rate of real GDP has been 3.5%.
It has been above 5% some 31% of the time, above 6% some 27% of the time and above 8% some 12.6% of the time. The above 5% includes the above 6%, etc.
It looks to me that your grading scale suffers from inflation. If you used something like a normal distribution a 4.3% growth rate would still be a C.
Posted by: spencer | November 30, 2005 at 11:38 AM
Hmmm. Well this is open to debate, so here goes.
1) I only went back to 1983, but the average is just about the same (a 3.4 in my sample versus 3.5 in yours).
2) A "B" is above average on grade scales. My metric has anything above a 3.5 grading out as a "B", so that sounds semantically correct.
3) The GPA for my sample works out to be a 2.39. Is that indicative of grade inflation - I am regarded as a somewhat hard grader, but I often have classes with higher GPAs?
Another way of looking at this is that most people regard 1997-99 as really good years. Yet the average growth then was just about the same as in this quarter - 4.4% vs. 4.3%.
I think it's a lot more instructive to say that Clinton got 3 A's, 4 B's, and 5 C's over that period, and then to note that Bush got a B for this quarter, and be happy with that.
For curiosity, Bush has gotten 1 A, 7 B's, 3 C's, and a D over the last 12 quarters. Putting that into GPA terms, it makes clear that there isn't much difference between Clinton's 2.8 (in his best years) or Bush's 2.7 over the last 3 years.
My point is that it focusing too highly on the numbers obscures the fact that the economy is doing pretty well.
Posted by: David Tufte | December 01, 2005 at 12:32 PM