GDP Growth Should Be Measured in Annual Rates

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The NYT discussed the release of new data showing the unemployment rate hitting 10.0 percent in the euro zone countries. At one point it notes that the euro zone economies had grown by 0.4 percent in the third quarter. This is a quarterly growth figure. It is standard practice in the United States to report growth data on an annual basis. On an annual basis, the euro zone's growth would have been approximately 1.6 percent. It is unlikely that many readers were aware of this fact. While it is common to report quarterly growth rates in Europe and elsewhere, there is no reason not to convert these numbers into annual rates to make them understandable to readers. After all, these countries also use a centigrade scale for temperatures. No newspaper would report the centigrade measure in discussing the weather in Europe, especially without informing readers of the metric it was using.

--Dean Baker

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