Misunderstanding GDP forecasts

Guido has done us all a favour by exposing the innumeracy of some Tories. He accuses the Chancellor of making “fantasy forecasts” and quotes a correspondent querying Darling’s forecast that the economy will grow by 0.75% this year:

Now, when the chancellor stood up at the dispatch box, three quarters of 2008 GDP growth were known:
Q1 0.3%
Q2 0%
Q3 -0.5%
In order to hit the forecast 0.75%, the economy has to grow at feisty 1% in the fourth quarter. Has the Chancellor been outside recently?

This is just drivel. Let me explain. Here is the series for known GDP (in billions, at 2003 market prices):
Q1 2007 = 313.2
Q2 2007 =  315.6
Q3 2007 = 318.0
Q4 2007 = 319.6
Q1 2008 = 320.45
Q2 2008 = 320.45
Q3 2008 = 318.9
Now, the Chancellor forecasts on page 184 of this pdf that GDP in the second half of this year will be £635.5bn. Take from this the £318.9bn we had in Q3 and we have a forecast for Q4 GDP of £316.6bn.
This is a fall of 0.7% from Q3, which is actually slightly more pessimistic than the Bank of England‘s forecast. Not a 1% rise.
So, how do we get a forecast for 0.75% growth this year? Simple. Just add up this year’s four quarters of  GDP - which comes to £1276.4bn - and compare it to last year’s, which was £1266.4bn.
We get year-on-year growth even with recession simply because the year started with GDP well above 2007’s level. For the same reason, we’ll probably see GDP fall in 2009 compared to 2008 even if the recovery begins next year because the year will start from a low base.
Now, I apologise for troubling most of you with such obvious triviality. I mention it just to show that some of Darling’s critics just haven’t the first idea what they are on about.

Comments

[kinglear]

Nice one Chris. Reminds me of the old conundrum about 3 chaps each paying £10, getting back a pound each and the waiter pocketing £2. Except 3x£9 = £27 +£2 = £29 as opposed to £30.
Lies damn lies and staistics eh?

[Chris Clark]

Reminds me of the last one of Guido's howlers.

http://www.order-order.com/2008/08/dont-know-about-guardian-polling.html

Here he took the Guardian to task for being unable to add and only revealed his inorance of rounding effects.

I like Guido but he really has to work on this.

[Matthew]

The IMF in its world economic outlook do forecasts for full year and Q4 on Q4, so I suggest Guido reads that.

[Tom]

I can see it now, row upon row of Tories being briefed on GCSE statistics before entering an economic crisis meeting.

[kinglear]

Guido isn't a Tory....

[dearieme]

Almost no-one in politics or journalism is any good with numbers. That's presumably how you come to make a living, Mr D?

[Matthew]

Guido isn't a Tory!

[Frank H Little]

Guido is a Roman Catholic reactionary; that's surely the classic definition of a Tory.