Monday, July 28, 2008

Not Just Q2 GDP On Thursday

The by far most important statistics day this week will be Thursday July 31, when the BEA will release Q2 GDP for the U.S. Speculation have been growing over what the Q2 U.S. GDP number will land at. After the relatively strong durables goods report last week I expect it to land at roughly 2%, give or take a few tenths of a percentage points, although as I pointed out before, basically all of this will be a statistical illusion.

Perhaps even more interesting will however be the simultaneously published annual review of the previously published "final" numbers who will turn out to be not so "final" after all. I cannot of course today say what the exact numbers will be, but based on previous annual reviews (se my comments in 2005, 2006 and 2007) we can get a good hint of what the general pattern of revisions will be.

Real growth for most quarters will be revised down, and so will average growth. This will take the form both in higher assumed inflation and lower nominal growth. The quarters that will be of particular interest will be Q4 2007 and Q1 2008. While it is not certain that they will be revised down (as I said, most quarters are revised down, but not all), it is likely. That in turn means that not just the real terms of trade adjusted number that I focus on could be negative for those quarters, but also even the official volume number. It should further be noted that even if the official number isn't revised below zero this time, that may still happen during the 2009 or 2010 (and even 2011 for Q1 2008) annual revisions.

Given how negative other indicators are, it is clear that official real growth should be negative for these quarters.


Blogger Edward Harrison said...

Stefan, you are 100% right about likely statistical revisions to GDP in the US. I have said the same thing a number of times on my own blog including today:

Question for you: how are things looking in Sweden, both in terms of the housing market and in terms of the overall economy.

Många Tack.

10:53 PM  

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