{"id":27375,"date":"2017-10-28T09:56:33","date_gmt":"2017-10-28T14:56:33","guid":{"rendered":"http:\/\/olduvai.ca\/?p=27375"},"modified":"2017-10-28T09:56:33","modified_gmt":"2017-10-28T14:56:33","slug":"how-much-illusion-in-gdp-what-you-see-is-not-what-you-get","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=27375","title":{"rendered":"How Much Illusion in GDP? What You See Is Not What You Get"},"content":{"rendered":"<header>\n<h3 class=\"entry-title\"><a href=\"https:\/\/wolfstreet.com\/2017\/10\/27\/what-you-see-is-not-what-you-get-in-gdp\/\">How Much Illusion in GDP? What You See Is Not What You Get<\/a><\/h3>\n<h2 class=\"entry-meta\"><strong style=\"font-size: 16px;\">Oh, the revisions.<\/strong><\/h2>\n<\/header>\n<div class=\"entry-content\">\n<p>The US economy, as measured by \u201creal\u201d GDP (adjusted for a version of inflation) grew 0.74% in the third quarter, compared to the prior quarter. That was a tad slower than the 0.76% growth in Q2, but up from the 0.31% growth in Q1.<\/p>\n<p>GDP was up 2.3% from a year ago.<\/p>\n<p>To confuse things further, in the US, we cling to the somewhat perplexing habit of expressing GDP as an \u201cannualized\u201d rate, which takes the quarterly growth rate (0.74%) and projects it over four quarters. This produced the annualized rate of 2.99%, or as we read this morning all over the media, \u201c3.0%.\u201d<\/p>\n<p>This was the \u201cadvance estimate\u201d by the Bureau of Economic Analysis. The BEA emphasizes that the advance estimate is based on source data that are \u201cincomplete or subject to further revision by the source agency.\u201d\u00a0These revisions can be big, up or down, as we\u2019ll see in a moment.<\/p>\n<p>The BEA will release the \u201csecond estimate\u201d for Q3 on November 28 and the \u201cthird estimate\u201d on December 21. More revisions are scheduled over the next few years.<\/p>\n<p>So 2.99% GDP growth annualized, or 0.74% GDP growth not annualized, or 2.3% growth from a year ago\u2026 is pretty good for our slow-growth, post-Financial-Crisis, experimental-monetary-policy era, but well within the range of that era, that goes from 5.2% annualized growth in Q3 2014 to a decline of 1.5% in Q1 2011. So nothing special here:<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-36385\" src=\"https:\/\/wolfstreet.com\/wp-content\/uploads\/2017\/10\/US-GDP-annualized-2017-Q3.png\" alt=\"\" width=\"512\" height=\"400\" \/><\/p>\n<p>I circled Q1 2014 and Q1 2011 in blue to show how much GDP estimates can get revised as time passes: both of these decliners showed growth in the \u201cadvance estimate.\u201d<\/p>\n<p>The \u201cadvance estimate\u201d of GDP in Q1 2014, released on <a href=\"https:\/\/www.bea.gov\/newsreleases\/national\/gdp\/2014\/pdf\/gdp1q14_adv.pdf\" target=\"_blank\" rel=\"noopener\">April 30, 2014<\/a>, showed a growth rate of +0.1% annualized. That was a measly growth rate. It was terrible. It caused a lot of hand-wringing. But it was <em>growth<\/em>.<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>How Much Illusion in GDP? What You See Is Not What You Get Oh, the revisions. The US economy, as measured by \u201creal\u201d GDP (adjusted for a version of inflation) grew 0.74% in the third quarter, compared to the prior quarter. That was a tad slower than the 0.76% growth in Q2, but up from [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[2213,2214,353,2084,841,4254,4255],"class_list":["post-27375","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bea","tag-bureau-of-economic-analysis","tag-gdp","tag-statistics","tag-us-economy","tag-wolf-richter","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/27375","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=27375"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/27375\/revisions"}],"predecessor-version":[{"id":27376,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/27375\/revisions\/27376"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=27375"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=27375"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=27375"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}