Monday, August 3, 2009

Data Revisions at BEA Change the Recession Picture

Using new input-output analysis, the Bureau of Economic Analysis has just completed a comprehensive revision of all the numbers in the National Income and Product Accounts going back to 1929.

Jeffrey Rogers Hummel details on what all this means for reports on the current recession:

The old estimates reported that real GDP fell by 0.2 percent in the fourth quarter of 2007, whereas the new estimates report that it rose by 2.1 percent. For the first quarter of 2008, the old estimate is a 0.9 percent rise; the new estimate is 0.7 percent fall. Second quarter of 2008: old, 2.8 percent rise; new, 1.5 percent rise. Third quarter of 2008: old, 0.5 percent fall; new, 2.7percent fall. Fourth quarter of 2008: old, 6.3 percent fall; new, 5.4 percent fall.

It is not immediately clear what the recent BEA release of a Q2 Real Gross Domestic Product decline of 1.0% annualized would have been under the prior method of BEA calculation. It's sufficient to say that government calculated numbers, such as GDP, CPI etc. must be taken with a grain of salt. The best numbers are actual price data, followed by industry data. Government calculated data is generally the least reliable--both because of the difficulty in collecting much of the data they attempt to quantify and because there always is the potential for political pressure to distort the numbers.

1 comment:

  1. Michelle did say "...we’re going to have to change our traditions, our history..."

    see and hear it here:

    In 1984 by Orwell, Winston Smith's job was to constantly revise history.

    Your best bet at this point is to read industry-specific and industry-produced price info and do the math yourselves.

    This circus is crazier by the minute. Tambourines and elephants are playing in the band. What a show- personally, I want to see orangutans courting Roman women.