jueves, 27 de junio de 2013

jueves, junio 27, 2013
 
June 26, 2013, 12:35 PM ET
 
Why Was GDP Revised Down so Much?
 
By Sarah Portlock


The Commerce Department offered an unpleasant surprise Wednesday in its latest estimate of U.S. economic growth: an unusually sharp downward revision to growth in the first quarter.

 


The economy expanded at a 1.8% annual pace in the first three months of the year, far slower than the 2.4% pace estimated just a month ago. The latest revision came largely from weaker-than-expected consumer spending — particularly in the services sector — and substantially slower business investment.

The government offers three readings of the nation’s gross domestic product in the months after a quarter ends, updating its estimates each time based on new information. The initial estimate of first-quarter growth, in late April, came in at 2.5%.

Releasing reports based on incomplete data isn’t unusual for government agencies, considering the demand by investors and policy makers for up-to-date snapshots of the economy’s performance. Rather, it’s a trade-off between timeliness, accuracy and relevance, the Commerce Department’s Bureau of Economic Analysis says.

The agency typically needs to make smaller revisions between its second and third estimates of GDP. After the first reading on GDP growth, the average change is between 0.5 percentage point higher and 0.5 percentage point lower, according to the BEA, which assembles the GDP report. The average change from the second to third readings is plus or minus 0.2 percentage point.

Why the large move this time? The department cited newly available information from a quarterly Census Bureau services survey, released June 6, and from international travel data. For the first quarter, the GDP revision came mostly from spending on services, notably foreign travel, legal services, personal care and health care services including dental and home health care.

The downward revision to nonresidential fixed investment — a measure of business spending — was primarily accounted for by structures, specifically communications and nonresidential power. The new figures were based on revised construction-spending data for February and March that was released June 3.

More surprises could come in a month.

On July 31, the BEA will release comprehensive annual revisions dating back to 1929, as well as “benchmarkrevisions that will update the year used for inflation-adjusted estimates to 2009, instead of the current 2005.

The government says the difference between that final growth estimate updated annually, and the initial GDP estimate released within a month of a quarter’s end, can be as much as 1.3 percentage points in either direction.

 
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