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Wonkbook: U.S. economy may be better off than thought

1) The economy may have grown more than previously thought: “The US grew at an annualised rate of 4.4 per cent in the fourth quarter of 2011, according to an alternative measure of output, suggesting the world’s largest economy may be healthier than previously thought. The rapid rise in gross domestic income compares with lower estimates for growth in gross domestic product. The Bureau of Economic Analysis left its estimate of fourth-quarter GDP growth unchanged at 3 per cent. The strength of the GDI number may explain a gap between the recent strength of the labour market and an apparent sluggishness of output and demand that has puzzled the US Federal Reserve. GDI measures all the wages and profits in the economy whereas GDP measures all of the spending. In theory, the two should be the same because every dollar of spending should be matched by a dollar of wages, profits or other income. Measurement errors mean that GDI and GDP often differ from quarter to quarter but over time they tend to converge.” (more)

  1. kileyrae posted this