On his radio program "Money Talk" yesterday Bob Brinker sought to defend recent economic performance as better than the Q2 report of 1.5 percent makes it appear. He accomplished this feat by averaging that number 1.5 with the 2.0 percent reported in Q1, coming up with a little better number, 1.75 percent.
This is wrong and I stated so in a post I have since removed.
I thought Bob Brinker said this for political reasons in the context of the remarks, and in a fit of pique I posted that Bob Brinker is a shill for the Obama regime in doing this, remembering as I am wont that Bob Brinker has stated on the program, among other things that hint of leaning to the Democrats despite calling himself an independent, that Obama's man in the US Senate, Dirty Harry Reid, is "a good man, a good man." Harry Reid is manifestly not a good man, recently using the well of the Senate to innoculate himself for potentially libelous remarks he has made from there against Mitt Romney, a fellow Mormon to Reid no less. Harry Reid has also been the chief instrument of gridlock on Capitol Hill, both now and when Pelosi was Speaker of the House. Just ask her how many bills she sent to him which never received action.
I've removed that post because I think it's possible Bob Brinker made the comments entirely out of ignorance, not from political bias. The reason is that I've realized that I've made the exact same mistake about GDP myself on this very blog, and my bias against Obama didn't keep me from making it. I actually forgot about those errors long after I had improved my understanding of GDP. So even if Bob Brinker did make the statements in order to put Obama's performance in the best possible light, it's also possible Bob Brinker just isn't as smart about GDP as he thinks he is. After all, it is a complicated subject about which very few people really are expert, and if I can make an honest mistake about it, so can he.
So the politics aside, it is impermissible to take the sum of quarterly headline GDP and divide by 2 or 3 or 4 to get an average rate. Each quarterly statement of GDP is already stating the annual rate, that is, the annual rate prevailing during the quarter. That's what the meaning of annualized is. As the quarters roll and the data become more full and complete, the numbers are routinely refined, even many years after we learn of the third and final estimate of quarterly GDP for month x, y or z. GDP is always a work in progress, and even somewhat controversial among the truly expert.
So in the second quarter, the annualized rate of GDP growth is 1.5 percent, not 2 percent, and not 1.75 percent. And that is terrible for everyone, Democrat, Republican and independent alike, because we are all in this together.
At least that is what we would like to think.
