Equations and Differentiations

3 November 2008

A couple of things to note about this story:

Eurozone is on verge of recession from BBC
The eurozone is on the brink of recession with economic growth falling 0.2% in the second quarter, the European Commission has announced.

First, we yet again have the BBC confusing a rate of change with the thing changing, The last time that I took note of such confusion from them, they were confusing the growth rate of GDPYt) with the change in that growth rate (Δ2Yt2). This time, they've turned around to confuse the growth rate of GDPYt) with GDP (Y) itself. (If they maintain the earlier confusion, then by transitivity they confuse Y with Δ2Yt2.)

The Eurozone economy isn't growing 0.2% more slowly than before; its production is shrinking at a rate of 0.2%. (GDP is not itself a growth rate of under-lying wealth, because the vast majority of what is produced is consumed, rather than saved.)

A second thing to note is that the BBC is referring to the Eurozone as on the verge of a recession, while America may already be in recession. The brute fact is essentially the same across these two economies — one quarter in which production declined — but the Eurozone is made to seem on the cusp while America is presented as perhaps already well-in.

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