Students are always on the lookout for things that get my goat, and Chicago GSBer Jim Friedland found one in Greg Ip's front page article in yesterday's Wall Street Journal. The offending passage:
Largely because consumer spending slowed to a near halt in the fourth quarter last year, overall economic growth fell below a 3% annual rate, economists estimate, after 10 quarters averaging about 4%.
My apologies to those who have heard me say this before -- and before, and before, and before -- but that's arithmetic, not economics. Consumer spending slowing (unsurprisingly) with income growth does not mean the former caused the latter. If anyone is truly puzzled why growth slowed a bit in 2005, I would direct your attention to the approximately 30 percent increase in retail energy prices from January through September.
By the way, the Ip article is otherwise, characteristically, worthwhile.
UPDATE: My apologies for the mistaken link in an earlier draft of this post. Thanks to Ted Rosenbaum for giving me the heads-up on the problem.