CEPR logo

Fact-based, data-driven research and analysis to advance democratic debate on vital issues shaping people’s lives.

Center for Economic and Policy Research
1611 Connecticut Ave. NW
Suite 400
Washington, DC 20009

Tel: 202-293-5380
Fax: 202-588-1356
https://cepr.net

Close

On This Page

People often confuse percent and percentage points. (I’ve even done it myself.) It makes a big difference. The Wall Street Journal told readers about G-20 plans to increase growth by 2 percent.

If this is accurate, then the goal is to have growth that is 2.0 percent faster than the baseline. In the U.S. case the baseline projections for annual growth are a bit more than 2.0 percent. The G-20 plans would then raise this figure by 0.04 percentage points. That would be nice, but not a terribly big deal. After a decade, GDP would be 0.4 percent higher than in the baseline scenario, a bit less than the economy grows in a normal quarter.

Alternatively, the article could have meant increasing growth by 2.0 percentage points. That would raise growth from the baseline of 2.0 percent to 4.0 percent. That would be a big deal, but doesn’t sound very plausible. A big stimulus could perhaps do this for a year or two, but no one seems to be talking about increasing the deficits by $300 billion or $400 billion.

Anyhow, it is difficult to understand what the agenda of the G-20 is supposed to be. Perhaps the use of percent is correct, but if so, we are probably wasting our money sending our leaders to focus on such small stakes.