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How the media misrepresents European growth numbers

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Yves Logghe / AP

(Read caption) European Commissioner for Economic and Monetary Affairs Olli Rehn addresses the media on the European Economic Spring Forecast at the European Commission headquarters in Brussels, Friday, May 13, 2011. Even though Germany's first quarter growth appears weaker than America's by most US reports, it is actually stronger, writes guest blogger Stefan Karlsson.

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Dean Baker makes a point similar to the one he has made in the past and that I have also made repeatedly in the past (for example here), namely that it is misleading when European quarterly growth numbers are reported in American press without annualizing them.

Hence, some readers might mistakenly believe that America has stronger growth than Germany because it's quarterly growth was reported by the media as 1.8% while Germany's was reported as 1.5%. But in reality German growth was far stronger because the American number was the annualized quarterly change while the German number was the nonannualized quarterly change. Expressed in the same way, growth in Germany was 1.5% in non-annualized terms while America's was 0.45%, and expressed in annualized terms Germany's growth was 6.1% while America's was 1.8%.

Baker correctly points out that the media's reporting of European and American growth numbers is as misleading as if American media would tell its audience that the temperature was 20 degrees in Europe on some July day, creating the false impression that Europe had freezing weather in July because 20 degrees Fahrenheit (the equivalent of -7 degrees Celsius) represents freezing weather, or if European media similarly would tell its audience that New York in December has temperatures of 30 degrees, creating the misleading impression that New York had hot summer weather in December whereas in reality 30 degrees Fahrenheit (the equivalent of -1 degree Celsius) is slightly below the freezing point.

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