Home > Market Commentary > Can Chanting “Accelerating Growth” Long and Hard Enough Make GDP Grow Faster??

Can Chanting “Accelerating Growth” Long and Hard Enough Make GDP Grow Faster??

Phil Davis has a great post this morning (07.23.14) where he discusses the financial media’s distorted reporting of GDP growth in the US and around the world. He specifically cites a Bloomberg article that references “accelerating growth.” Let’s look at a couple of graphs and watch as GDP growth accelerates. First graph below shows quarterly GDP growth in Japan, the UK, Germany and the US since the 4th quarter of 2009.

Quarterly-GDP-GrowthDoes everyone see which country is driving the “acceleration?” Yep — Japan and its Godzilla-size QE experiment. Next let’s take a look at the weighted average growth rate of the 4 countries (the US consistently accounts for 60% of the total GDP of all 4 countries). Japan’s 1-quarter bolus to the “acceleration” of GDP growth has lifted the average all the way to a spectacular . . . 1.4%. (Yes, the rates are annualized.)

Weighted-Average-GDP-Growth

Let’s add a trendline to the above graph and have another look:

Weighted-Average-GDP-Growth-Trendline

Adding to Phil’s point: if the trendline points downwards, but the financial media calls it accelerating, then it must be so. Dissent at your own peril.

Advertisements
Categories: Market Commentary
  1. No comments yet.
  1. November 21, 2014 at 8:21 am

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: