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Graph of the Week: Real GDP Growth
J. Bradford DeLong
- As of mid-July 2000, economists expected that real GDP growth in the second--spring--quarter of 2000 would turn out to have been at a rate of about 4.6% per year.
- Expectations of such growth were largely the result of strong growth in industrial production--a rate of 6.0% per year--in the second quarter.
- In 1997, 1998, and 1999, real GDP grew at a rate of 4.2% per year. So far 2000 seems likely to exceed that rate.
- This strong growth has been a real surprise: back in the early 1990s few economists would have dared predict consistent growth at a rate higher than 2.5% per year.
- This strong growth is in all likelihood driven by the productivity benefits of the information technology revolution.
- This strong growth could come to an end quickly, if the Federal Reserve concludes that it is generating rising inflation and then raises interest rates to reduce aggregate demand.
Professor of Economics J. Bradford DeLong, 601 Evans Hall, #3880
University of California at Berkeley
Berkeley, CA 94720-3880
(510) 643-4027 phone (510) 642-6615 fax
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