"Dial 911 If This Story Makes Your Eyes Bleed" (New York Post)
In order to get to [the] 2.8 percent growth [reported last Friday,] the Commerce Department used a very unrealistic level of inflation in its calculations.
Let me explain: The government comes up with a figure on how much it thinks the economy grew, or shrunk. Friday’s figure was a first estimate for the fourth quarter, so most of the numbers used in the calculation are only guesstimates anyway. (But that’s for a different story.)
The government then takes that growth figure, subtracts the rate of inflation and comes up with the real growth it reports in its press release.
So, in other words, if inflation is rising it reduces the rate of actual, after inflation, growth — which is the figure that Washington reports.
In Friday’s number the government used 0.4 percent as the rate of inflation. Zero. Point. Four. Percent.
In which country is inflation that low? Certainly not in America. Absolutely not in the last four months of 2011.
The consumer price index, which is put out by the US Census Bureau, had prices up 3 percent for the year.
And the rate of inflation used in calculating the third-quarter 2011 GDP was 2.6 percent; in the first and second quarters, combined, the rate was 2.5 percent; it was 1.9 percent in the fourth quarter of 2010.
So how does the Zero-Point-Four-Freakin’ percent sound now?
That’s how Commerce got to the not-very-inspiring 2.8 percent growth it reported last Friday.
