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

button more charts
button chart prev
button chart next

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

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at