Interpreting the GDP
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JEREMY HOBSON: In about half an hour, we’ll hear from the U.S. government on how fast the economy here grew last quarter.
Marketplace’s Alisa Roth gives us an idea of how we can interpret the latest numbers on Gross Domestic Product.
ALISA ROTH: GDP can be too high or it can be too low. And like a lot of economic indicators, it’s partly relative. That is, we compare the number now to the last quarter, or to last year.
Karen Petrou is at Federal Financial Analytics. A research firm. She says there are some general guidelines though:
KAREN PETROU: In a mature economy, the GDP growth 5, 6 percent is, frankly as high as it should go without starting to run the danger of bubbles and inflation.
In an emerging economy that’s still growing, like China, for example, it can go a lot higher. She says after that, you run the risk of overheating. She says during the recession, we had GDP of about zero. Anything above that is good news.
PETROU: Positive GDP means we’re coming out of the hole. And it means we will have employment gains.
But she says the housing market still needs to pick up for us to see really solid numbers.
I’m Alisa Roth for Marketplace.
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