U.S. Recession Worse Than Previously Estimated

Second quarter U.S. GDP growth came in roughly in line (slightly below) expectations. What was perhaps more interesting was that in the annual revision GDP was again downward revised, just as it was in previous annual revisions in 2009, 2008, 2007 and 2006.

In 2007, GDP rose by 1.9% compared to the previous estimate of 2.1%, in 2008 growth was zero compared to the previous 0.4% growth estimate and in 2009 GDP fell 2.6% compared to the previous estimate of a 2.4% contraction. The total downward revision was thus 0.8%.

National income was also revised down, but not quite as much, reflecting both an upward revision of net factor income from abroad and a downward revision of statistical discrepancy.

Given the consistent pattern that growth is always revised down in the annual revisions (for years as a whole, individual quarters can be upwardly revised or unrevised), I can safely predict that in next year's annual revision, growth for 2008 and 2009 will be revised down further.