CHART OF THE DAY: The CPI-Adjusted GDP Growth Rate Was Stunningly Low

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The economy grew by 1% in the second quarter, according to inflation-adjusted preliminary data released by the Bureau of Economic Analysis.

But to most Americans it did not feel like growth.

That’s because the inflation adjustment used by the BEA is far more conservative than the Bureau of labour’s consumer price index, which is based on prices paid for goods and services — i.e. the things that consumers notice.

When adjusted for CPI, the economy actually shrunk by a stunning 3.4% in the second quarter, according to Economist Doug Short.

chart of the day, real gdp (cpi variant), aug 2011