Fourth-Quarter GDP

GDP growth raised to 1.6%.
You wouldn’t know this from how people talk about the economy, but GDP growth is far more stable than most people realize. I often hear that the economy is “surging” or “crashing.” In reality, economic growth is a pretty stable trend that occasionally has some minor bumps.
Here’s a graph of real GDP growth over the last 60 years (red line) with a trend line line (black line).
Here’s a look at the trailing three-quarter growth rate of real GDP. I’m not sure why, but the nine-month view seems to work the best.
Notice how over the last 20 years, the economy has become far less cyclical. The peaks are getting lower, and the valleys are getting higher.
The Stalwart has speculated that as the overall economy has become more stable, the individual pieces have become more volatile. I think he’s right. Perhaps the price for collective security is the growth of constituent risk.

Posted by on February 28th, 2006 at 9:01 am

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