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View Diary: Economic news shows still more uncertainty (94 comments)

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  •  You've got the revisions wrong. (6+ / 0-)

    Revisions of quarterly GDP growth/decline are typically downward during while the economy goes into a recession and it near the bottom, but upward as it comes out.  Hence, the numbers for 2009 were worse than originally reported, but the revision for the first quarter of 2010 actually went up by an entire percentage point, from 2.7% to 3.7%.

    It is much more likely that the last quarter's GDP growth will be revised upwards than downwards.

    Art is the handmaid of human good.

    by joe from Lowell on Wed Aug 04, 2010 at 07:53:58 AM PDT

    •  Good catch. (2+ / 0-)
      Recommended by:
      RenMin, joe from Lowell

      {This Space Intentionally Left Blank}

      by DaveV on Wed Aug 04, 2010 at 07:56:26 AM PDT

      [ Parent ]

    •  The problem with looking at factory orders (2+ / 0-)
      Recommended by:
      RenMin, joe from Lowell

      in isolation is that while the big miss of the estimates will cause a subtraction to the initial estimate of Q2 GDP, the factory orders number itself is subject to revision AND it completely ignores all the other estimated numbers that will be revised that comprise GDP.

    •  I thought 1Q had been revised up. (2+ / 0-)
      Recommended by:
      RenMin, joe from Lowell

      Do you have an easy link?

      Someone on daily kos called me a poopyhead. My life is SO like Nelson Mandela's.

      by Inland on Wed Aug 04, 2010 at 08:09:53 AM PDT

      [ Parent ]

    •  PI, PCE, Stimulus, all down-GDP will follow. (1+ / 0-)
      Recommended by:
      RenMin

      Q1 2010 was a stimulus and inventory rebuilding bump.  The only way we get a bump in Q4 GDP is if the GDP deflater is fooled by the coming jump in gas and food prices.

    •  In fact, during the recovery from the 2001... (0+ / 0-)

      ...recession, the revisions were NOT upward as the economy came out. Moreover, the quarterly numbers for 2009, when GDP was starting to grow - when conventional measurement says the recession was "com[ing] out" - have both been revised downward. The first quarter of 2010 was the third quarter of coming out.

      Since the first quarter was estimated in April, we've had three revisions of its GDP. And given that Commerce just revised all the numbers for the past three years, we're likely to see even more revisions of the second quarter before we're done.

      Don't tell me what you believe. Tell me what you do and I'll tell you what you believe.

      by Meteor Blades on Wed Aug 04, 2010 at 10:04:27 AM PDT

      [ Parent ]

      •  Cherry-picked counter-example? Really, MB? (0+ / 0-)

        IN FACT, the 2001 recession was not the only recession this country has been through, and cherry-picking the one example that runs contrary to the strong trend is extremely misleading.  As I said, which you don't seem to be actually refuting, revisions during the beginning of a recession, and when the economy is still in the depths, tend to be downward, while revisions during recoveries tend to be upward, like the Q1 revision.

        As I said, the most recent, relevant revision was UPWARDS for the first quarter, coming in at 0.7% higher than the initial estimate.  As I recall, you wrote a similarly hand-wringing diary about that terrible initial estimate, and then another when it was first revised downwards...but now that it's been revised way up, we get crickets from you.

        Art is the handmaid of human good.

        by joe from Lowell on Wed Aug 04, 2010 at 12:21:52 PM PDT

        [ Parent ]

        •  You're the one who claimed... (0+ / 0-)

          ...that the GDP numbers are more likely to be revised upward during the early days of recovery when the economy is first emerging from a downturn. I showed that you were wrong about that in the cases of the two most recent recessions. If you'll check out the immediate aftermath of the 1990-91 recession, you'll see that the same situation applies as I described for 2001.

          What you seem now to be saying is that the first quarter or first couple of quarters of a recovery in GDP tends to be downwardly revised and later recovery quarters upwardly revised (although originally you seemed to be saying that the early quarters of recovery were upwardly revised).

          In fact, this is not the case. Revisions in all the first four to six quarters of recoveries back to the 1970s "tend to be" all over the map, sometimes down, sometimes up. And, sometimes, as with the first quarter of 2010, up and down with each new revision.

          You're mistaken about what I wrote - didn't write, as a matter of fact - about earlier reports on 1st quarter GDP estimates.

          You're also mistaken in your own characterization of the first quarter of this year, which was originally estimated at 3.2%, which means the latest revision is only 0.5%, not 0.7%, higher than the first "advance" estimate. The questions that need answering are: why did the estimates go down from 3.2% to 3.0% to 2.7% and then up to 3.7% over four months? And given the three years' worth of revisions Commerce announced last Friday, where will that 1Q GDP figure be next July?

          As for "crickets," I noted the revised revision prominently in my GDP piece on Friday here:

          In addition to the second-quarter report, the department’s annual revisions of GDP from earlier quarters indicate that the Great Recession has been even deeper than previously thought and the recovery weaker. For instance, the third quarter of 2009 was revised from 2.2 percent growth to 1.6 percent, and the fourth quarter of 2009 - which has shown the largest growth since the recession began in 2007 - was revised from 5.6 percent to 5 percent. GDP for the first quarter of 2010 was modified from 2.7 percent to 3.7 percent, the only upward revision.

          [Emphasis added.]

          Don't tell me what you believe. Tell me what you do and I'll tell you what you believe.

          by Meteor Blades on Wed Aug 04, 2010 at 02:56:28 PM PDT

          [ Parent ]

    •  No (0+ / 0-)

      2Q10 will be revised downward. The inventory numbers used in the GDP calculation were higher than the numbers that just came out for June by 1.0. So, if those numbers are plugged into the GDP calculation as a simple adjustment you get 1.7. However, other adjustments will come into play which is why you see downward estimates already ranging from 1.9 to 2.4 for the next revision of 2Q10 GDP. The flat PCE numbers from June and (when they are released) the Trade imbalance numbers from June should bring it down further.

      By the time we get to 4Q10 with all the Census jobs gone, sluggish consumer spending on top of what should be another disaster holiday season, and stimulus going away, not too mention the extend unemployment benefits expiring once again in November we could be pretty close to a negative print on GDP.

      Right now, there is no upside. No source of jobs. No source of wage growth. Rising foreclosures. Rising bankruptcies.

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