In their “final” revision of their estimate of the fourth quarter 2011 GDP, the Bureau of Economic Analysis (BEA) found that the annualized rate of U.S. domestic economic growth was 2.97%, down a mere 0.01 percent from their last estimate for the fourth quarter and still more than a percent higher than their “final” estimate of 1.81% for the third quarter of 2011. This revision to the prior month’s report does not reflect actual monthly changes in the economy, but rather another month’s improvement in the BEA’s understanding of what was happening during the prior quarter.
Even if there was no meaningful alteration in the headline number, there were a few notable changes within the “mix” of the components. The contribution that the consumption of consumer goods made to the headline number strengthened, but it was offset by a nearly equal weakening of demand for consumer services. Similarly, the contribution of fixed investments to the headline number increased (relative to the prior report) by a quarter of a percent, only to be offset by a nearly equal drop in exports.
Although this is the last time that a monthly revision will be issued covering the fourth quarter of 2011, the BEA annually makes substantial revisions to historic data in July of each year — and the scope of those modifications are often substantial in both size and the historic reach. Unfortunately, for the past several years those July revisions have resulted in quiet (and media neglected) acknowledgments that the “Great Recession” was far more severe than was previously reported — long after the potential for market or electoral consequences of those admissions had passed.
Read more: http://econintersect.com/wordpress/?p=20562
Even if there was no meaningful alteration in the headline number, there were a few notable changes within the “mix” of the components. The contribution that the consumption of consumer goods made to the headline number strengthened, but it was offset by a nearly equal weakening of demand for consumer services. Similarly, the contribution of fixed investments to the headline number increased (relative to the prior report) by a quarter of a percent, only to be offset by a nearly equal drop in exports.
Although this is the last time that a monthly revision will be issued covering the fourth quarter of 2011, the BEA annually makes substantial revisions to historic data in July of each year — and the scope of those modifications are often substantial in both size and the historic reach. Unfortunately, for the past several years those July revisions have resulted in quiet (and media neglected) acknowledgments that the “Great Recession” was far more severe than was previously reported — long after the potential for market or electoral consequences of those admissions had passed.
Read more: http://econintersect.com/wordpress/?p=20562
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