Surprise - NY Times Misleads

Larry Kudlow points out how Louis Uchitelle writing for the New York Times misleads his readers about gross domestic product.

It’s not even remotely as important as the Iraqi election, but the New York Times’s impoverished coverage of the latest reading on U.S. gross domestic product deserves a mention. Both the headline and the thrust of the story by Times writer Louis Uchitelle suggest a big slowdown in economic growth. While this is statistically correct, it is analytically wrong. The main thought behind the story -- that the economy has registered its “weakest quarterly pace in nearly two years, held down by a surge in imports” -- is completely misleading.

Underneath the headline number of 3.1 percent real GDP was a huge 5.5 percent increase in private-sector output (less government spending and trade). Private consumption and business investment comprises 80 percent of GDP -- a factoid the Times never relates. In fact, the tell-tale number in this latest GDP report is the outsized 15 percent gain in business investment -- the single most important swing factor in economic activity.
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Not for the Times. The left-leaning Uchitelle worked hard to make the worst out of a good story. He obsessively emphasized the trade-deficit drag on output, a factor that statistically reduced overall GDP by 1.73 percentage points. This Alice-in-Wonderland arithmetic is totally misleading. To back up his pessimistic overreach, Uchitelle found a Wall Street economist from Goldman Sachs named Edward McKelvey who said, “foreigners are continuing to eat our lunch.”

Read it completely here.