My Favorite Economic Indicator
By Arnold Kling
Apparently, the echo chamber of left-wing macro pundits has pronounced a recession to be imminent. For example, Nouriel Roubini writes,
Given the recent flow of dismal economic indicators, I now believe that the odds of a U.S. recession by year end have increased from 50% to 70%.
For these pundits, the most dismal indicator is that we have a Republican Administration. They have been gloomy for six years now.
Just for the heck of it, I looked up my favorite indicator, the long-term average growth rate of productivity in the nonfarm business sector, calculated by the Bureau of Labor Statistics. From the first quarter of 2001 to the first quarter of this year, the average annual increase was 3.46 percent. That’s a relatively high value.
But Michael Mandel says to expect downward revisions for numbers for the past two years.
UPDATE: the revisions were not all that large. Now, using Q1, the average annual increase is 3.29 percent, and using the preliminary Q2 numbers, the average annual increase since 2001 Q2 is 3.07 percent.