The Associated Press reports today that 2nd quarter GDP growth of 2.9% shows that “the economy might be slightly stronger than previously thought.”
Not only does that confirm what I said a month ago, but guess what: the official number of 2.9% is still too anemic of an estimate. Real GDP is probably growing closer to a 4.2% annualized rate, based on the 2-quarter method for estimating growth. [The 2-quarter method has been a more reliable predictor of GDP growth than the BEA’s 1-quarter method. Do I sound like a broken record?]
Here’s this month’s chart showing both methods for estimating GDP growth:
[UPDATE: Click here for a brief, explicit summary of the math.]
