Expectations Go Low For U.S. Growth

Apr 24, 2011
Originally published on April 24, 2011 10:02 am
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LIANE HANSEN, Host:

NPR's Tamara Keith reports.

TAMARA KEITH: Jeff Rosen is an economist at Briefing.com, who puts out a weekly report called "GDP Monitor."

JEFF ROSEN: We started a three percent at the beginning of the quarter.

KEITH: Three percent is a pretty healthy growth rate. But Rosen's projections didn't stay that rosy for long.

ROSEN: Every week, it seemed the numbers that were coming in were below what we had anticipated and we continuously cut our forecast.

KEITH: Nigel Gault is chief U.S. economist at the forecasting firm IHS Global Insight. He says there are other factors.

NIGEL GAULT: If the weather was particularly bad, that will take down the GDP estimate for that quarter. But it won't tell us exactly what was happening to the underlying part of the economy.

KEITH: Unidentified Woman #2: Wreaking havoc in dozens of states along the way...

(SOUNDBITE OF A NEWS CLIPS)

KEITH: Gault says the economic models adjust for normal seasonal variations, but these storms weren't normal.

GAULT: These were big storms. These were worse than you would normally see at that time of year.

KEITH: But Gault is also quick to point out that GDP isn't the only measure of the economy that matters. Lakshman Achuthan agrees.

LAKSHMAN ACHUTHAN: If you were only looking at GDP, you'd have kind of a weird picture of the U.S. economy.

KEITH: Achuthan is co-founder of the Economic Cycle Research Institute. And he says you have to look at other indicators too, like job creation and sales growth which point to economic revival. He says most economists - and probably by extension those of us who report on the economy - fixate on GDP too much.

ACHUTHAN: I think economists like to look at every wiggle as though it means a lot, and it actually doesn't.

KEITH: When that number comes out next Thursday, if it's as weak as many expect, Briefing.com's Jeff Rosen says it will make headlines.

ROSEN: The number itself is going to be scary looking. And there will be a lot of political banter about how the economy is not moving ahead and, you know, everything is slowing down. But the reality of the situation is the business side, you know, the economy is still moving ahead. The statistical way of calculating is making it look weaker than it really is.

KEITH: Tamara Keith, NPR News, Washington. Transcript provided by NPR, Copyright NPR.