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Economists Divided Over That Claim of 2.7% Growth

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<i> From Associated Press</i>

When the Commerce Department said this week that the nation’s economy grew 2.7% in the third quarter, many forecasters who had predicted much lower expansion dismissed the report as incredible.

Moreover, the figure prompted these analysts to publicly question the reliability of the government’s gross domestic product reports, which tally all the goods and services produced in the United States. The GDP is one of the most commonly used measures of the economy’s health.

The report also raised some eyebrows because it was seen as a possible boost to President Bush one week before Election Day.

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Bush in recent days has used the GDP report in his campaign speeches to try to counter Democratic criticism of his economic performance.

“The GDP is an increasingly arcane and irrelevant measure of the economy,” said Lacy Hunt, chief economist at Carroll McEntee & McGinley Inc. in New York. “It is subject to a host of measurement and calculation problems and statistical problems.”

Robert Parker, associate director at the Commerce Department bureau that compiles the data, defended the latest figures. “We knew that the numbers were at odds with the consensus forecasts” of up to 1.5%, he said. “We’re not happy when there are surprises. Our job is not to pull a number out of a hat.

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“This quarter has been extremely difficult,” he added.

The theory behind the GDP goes back to the 1920s. Its precursor, the gross national product, was established as a regular government report during World War II, when the government wanted to track production capacity.

In 1991, officials changed over to the gross domestic product, which does not contain foreign profits earned by U.S. companies.

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