GDP benchmark revisions coming on Friday

On Friday, when the BEA reports the initial 2nd quarter GDP numbers, it will do so based on completely revised historical data.  Expect some surprises.

What is coming on July 31st is what is known as benchmark revisions of the national income and product accounts (NIPA).  Last month, along with the final Q1 2009 GDP figures, the BEA released a statement detailing the changes.

On July 31, 2009, the Bureau of Economic Analysis (BEA) will release the results of a comprehensive, or benchmark, revision of the national income and product accounts (NIPAs).  The comprehensive revision will incorporate the results of the 2002 benchmark input-output (I-O) accounts as well as changes in definitions, classifications, statistical methods, source data, and presentation.

Advance information about the comprehensive revision will be posted here as it becomes available.

The revision is the first since the end of 2003. I would expect downward revisions for 2008 and 2009, reflecting a recessionary environment. Both Q1 and Q2 2008 showed real GDP growth even though the recession began in December 2007. Q1 2008 came in at 0.9% and Q2 2008 was a Bush tax cut stimulus-influenced 2.8%.  I wouldn’t be surprised to see Q1 2008 cut to a negative number.

At a minimum, expect some major revisions on personal income and savings data which could be wild cards changing economists view of the nature of the present economic outlook.  This will not be your typical GDP report.

9 Comments
  1. Anonymous says

    Hi Edward,

    Do you think Gov spending will offset the decline in corporate (& gov) revenue and cosumer spending?

    Bloomberg reports the consensus estimate for Q/Q growth to be at -0.7%.

    I would truly appreciate it if I could gather some insights from you.

    Thanks,

    SL

    1. Edward Harrison says

      These numbers are going to be a true wildcard because of the revisions, because of the gov’t spending and because we are at a unique point where at any time positive GDP is a distinct possibility. At this point, I expect an upside surprise and growth very close to zero. July is tracking positive growth so far so I fully expect Q3 to be positive. If Q4 comes in positive as well, then the recession might end up getting dated in June.

      The keys to me will be the personal income revisions and the next ISM survey out soon. If both are good numbers then we are probably very near the end of recession (despite my Q4 or Q1 call).

      A lot of question marks right now, but we are getting ever closer to a technical recovery.

      1. Anonymous says

        Thanks Edward.

  2. Terry says

    Call me cynical, but I expect the BEA re-do will show things were better than we thought they were–and will be better going forward. Not in the several decades I have been somewhat interested in these things have USG revisions to statistical methodologies showed the US economy in a worse light. Take a look at the changes in counting the unemployed, in measuring inflation, in tracking the money supply,….

    We’re living in an increasingly Orwellian world.

  3. Anonymous says

    Given that so many economists are revising up their GDP estimates, I’m surprised the gold price is doing so well, as described here: http://www.bloomberg.com/apps/news?pid=20601116&sid=aA3eLD2EZ5CM

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