February 17, 2014 § Leave a comment
Economists closely watch the quarterly change in gross domestic product as a sign of a country’s economic well-being. A contraction (aka negative economic growth) in GDP for two consecutive quarters is the technical indicator of a recession.
Here’s the catch: the U.S. and Eurozone calculate the quarterly change differently. If you want to chart the figures together one set needs to be recalculated.
The U.S. expresses its GDP figures as a quarterly change at a seasonally adjusted annual rate, or what the quarterly rate would be if it continued for four quarters. The Bureau of Economic Analysis does this to make it easier to compare a quarter’s rate to rates in previous years. The Wall Street Journal chart above is a good example.
The Eurozone expresses GDP as a straight change from the previous quarter, not at an annual rate. See the chart below from the National Post.
If you want to compare Eurozone GDP to U.S. GDP your best bet is to recalculate the Eurozone GDP at an annual rate. I’m not going to step you through it, since the BEA already does an excellent job of it at this link: http://www.bea.gov/faq/index.cfm?faq_id=122. You will need to get the quarterly GDP values (not the percentage changes) to make this calculation.
July 15, 2012 § Leave a comment
Federal budget documents often show the same spending in two different measures, “budget authority” and “outlays.” As an editor, reporter or infographics journalist, you need to know the difference between the two, or you will waste copious time figuring out which figures to use and why your numbers don’t match everyone else’s. Fortunately, the budget states clearly on every table and spreadsheet whether the numbers are calculated as budget authority or outlays.
So what’s the difference between the outlays and budget authority? Outlays for fiscal 2013 reflect the actual amount of money the federal government will spend in 2013. The outlays figure for 2013 includes some unspent money that was authorized in previous budgets and excludes some spending approved in 2013 that will carry over into 2014 and beyond. Budget authority for 2013 excludes any funding authorized in previous years but includes money authorized in 2013 that will carry over into the future. If you are having a hard time keeping that straight, check out the diagram above, which comes from the budget concepts section of the federal budget, page 138.
So when do you use outlays and when do you use budget authority?
Use outlays when you are referring to the overall size of the fiscal budget for a given year or when you want to show the deficit or surplus.
July 9, 2012 § 1 Comment
Diffusion indexes confuse the heck out of people the first time they see one. But once diffusion indexes become familiar, they make a whole lot of sense. To chart a diffusion index and label it properly, you really need to understand what the numbers mean. (Okay, that goes for any graphic, but don’t expect to wing it with a diffusion index.)
With a diffusion index, 50 is the baseline, anything above that indicates expansion, anything below that indicates contraction. What confuses people is this: If the number is 60 in one month and 55 the next, that does not indicate contraction, it indicates slower expansion. If the number is 40 one month and 45 the next, that does not indicate expansion, it indicates slower contraction.
Take a look at the four examples of diffusion indexes in this post. I believe they were all made by Pat Minczeski on The Wall Street Journal graphics team. You will see that The Wall Street Journal took great pains to label not just whether a figure indicates expansion or contraction, but whether it is slower or faster than the previous month.
Usually when you chart a diffusion index, you are looking at some form of purchasing managers index of manufacturing activity. The Institute for Supply Management and Markit provide much of this data. To create an index, ISM surveys purchasing managers and asks them whether they’re doing more, less, or the same of things like placing new orders, hiring people or producing goods. The manufacturing index (or its sub-indexes) reflects their responses.
Here is a link to the most recent ISM report: http://www.ism.ws/ISMReport/content.cfm?ItemNumber=10748&navItemNumber=12949
And here are the historical numbers for the main manufacturing index: http://www.ism.ws/ISMReport/content.cfm?ItemNumber=10752
For detailed historical figures, you probably need to contact the Institute for Supply Management or Markit. I haven’t found detailed figures on their sites. Give me a shout if you come across them.