Originally published on July 30, 2020
A perfect quarter to look at the absurdity of reporting "annual rates" in the headlines.
This morning, we were confronted with horrible news, which we've been expecting all along, but this news, though truly horrible, was also a result of something called "annual rate." What we saw in the headlines was that GDP, adjusted for inflation, collapsed by "32.9%" in Q2.
That should have been reported as "32.9% Annualized." It was an "annual rate," meaning that the Q2 drop was essentially multiplied by 4 (with adjustments) to obtain a