You’ve often stated that gross domestic product, or GDP, is the most comprehensive measure of our economy. The latest reading on GDP was just released, and it surprised economists. Was it a good surprise? N.C. State University economist Mike Walden responds.
“Well, just to review very quickly, GDP represents the aggregate production value of our economy. Another way of looking at it is the aggregate income that’s earned by everyone in the economy. And it is tracked very closely by economists as well as policy makers.
“We just had the first estimate of GDP for the second quarter of this year come out. Now on an annualized basis, it went up 1.7 percent. Now that was much better than the expectation, which was for about half of that. So that’s why many people are looking at this report as being good.
“On the other hand — a famous comment by economists, on the other hand — this is still a very modest rate. If we had a robust growing economy, we would see that rate be 3 or 4 percent. Now 1.7 percent is well above zero. Zero obviously means the economy is stagnant. If we got a GDP report where it was negative that would mean we would be in recessionary territory.
“So again, the rate indicates we’re not in a recession. We’re not stagnant. We are growing, but we’re growing at a very slow pace, which has really been par for the course over the last couple of years.”