In January, I noted the Census Bureau had construction spending errors going back a decade. Since construction spending directly feeds BEA GDP numbers, GDP will be revised as well.
On July 29, the BEA will post revisions for years 2013 through 2015. Other years will follow. How big will the revisions be?
Breitbart claims to know. Do they?
Breitbart reports Obama Administration to Revise Total GDP Growth Down 2%
The Department’s Bureau of Economic Statistics (BEA) regularly makes small revisions to its published statistics as more information becomes available over time. But in a massively large adjustment, the BEA just revised downward — by $346 billion — the real (after-inflation) GDP for 50 states and the District of Columbia, covering the 11-year period from 2005 through the end of 2015.
According to BEA’s newest data, real GDP was overstated by about $125 billion from 2007 through 2008, during the period leading into the start of the Great Recession. But the overstatement shrank to about $70 billion in 2009.
During 2012 and 2013, when the U.S. economy had what some have referred to as a micro-recession, the overstatement of real GDP growth ballooned to about $275 billion. Despite over $100 billion in revisions to real GDP growth in 2014 and 2015, the overstatement continued to grow to $324 billion, or 2 percent of GDP.
Links Head Nowhere
Not a single Breitbart link heads to any BEA discussion of revisions.
Since they don’t (and I would be happy to report a correction), I am guessing, they are guessing.
From the May BEA article on “GDP and the Economy” we see …
Preview of the Upcoming Annual NIPA Revision
On July 29, 2016, the Bureau of Economic Analysis (BEA) will release the results of the annual revision of the national income and product accounts (NIPAs) together with the advance estimate of gross domestic product (GDP) for the second quarter of 2016. The revision will cover the most recent 3 years (2013 through 2015) and the first quarter of 2016. The reference year for index numbers and chained-dollar estimates will remain 2009.
In November 2015, the Census Bureau released revised monthly estimates of construction spending for January 2005 through October 2015. BEA uses these data to prepare annual estimates of private fixed investment for residential structures. For the upcoming revision, BEA will incorporate revised Census Bureau data into its annual estimates of residential improvements for 2013 through 2015. Estimates for earlier years will be revised during a future revision of the NIPAs. For details, see the FAQ “How will the revised Census Bureau construction spending data affect BEA’s quarterly and annual estimates of private fixed investment?”
Old News
I did locate Excel templates for the revisions but they are blank. I fail to see how Breitbart knows the revision will be 2% on data not yet released.
The other possibility is Breitbart is linking to old news as if it is new news. The site did reference the July 31 2015 Political Calculations article Revising Away Obama’s GDP.
“Ironman” at Political Calculations provides a nice animated snapshot of what happened and when. Here is a static version incorporating all the changes.
Guessing the New Revisions
My guess is that 2014 GDP will rise but 2015 GDP will drop as a result of the revisions. I made that guess on January 5, 2016 in Diving Into the Revisions: Construction Spending Revised Lower 7 Consecutive Months! 2015 GDP Will Decline vs. Estimates: By How Much?
For more detail, I estimated third quarter GDP will be revised about .57 percentage points lower, second quarter .56 percentage points lower, and first quarter .21 percentage points higher, while noting “Those are very crude calculations that may be wildly off the mark.”
See the link for my methodology. I did not estimate 2014 other than “higher”.
Perhaps I can get “Ironman” to make some political calculations, and if so I will post them.
Mike “Mish” Shedlock
@Mish — If you revisit Political Calculations, he has an updated post about the GDP revisions from just yesterday:
http://politicalcalculations.blogspot.com/2016/06/an-unexpected-sneak-peek-of-massive.html
I haven’t carefully read the Political Calculations blog post (just gave it a quick read earlier today), so I have no opinion as yet — just saying it is there.
I have not, and don’t plan to, read whatever is at Breitbart
The link the Breitbart article goes to the state level data, and the Political Calculations link above mentions it. It looks like the Breitbart is aggregating the state data to guess the national revision. Can state data be aggregated, or is it like China where the provincial GDP is reported separately and varies widely?
Ironman had an addendum to his post saying someone contacted hi. Quite possibly me – because I did. It may have been someone else too.
Mish
Is this being done for Obama’s “legacy?
https://twitter.com/crazyinrussia/status/712083199720030209
For the Moslem President? Butt…of course!
Snark!
As long as deficit spending is included in GDP growth, the numbers are BS. Any “growth” is largely focused on the service sector which really doesn’t *produce* anything and borrowing/debt and spending. That’s not economic growth, it’s just what passes for money these days changing hands.
“I am guessing, they are guessing.”
Given the precision of their numbers, I am guessing they have spoken to someone or had an advance peak at the numbers pre-release.
Known as an “inside source.” Which is why no link. Not much different than how NY Times would do things. But we will know soon enough.
“Known as an “inside source.” Which is why no link.”
This story is garbage. No mention of any source … including “inside source”.
ZeroHedge is famous for doing this … and why I take anything ZH says with a healthy dose of salt.
Except is was Breitbart, not ZH.
Funny how you dismiss the ‘book’ based on the ‘cover’.
Perhaps you could enlighten us regarding your ‘approved’ news sources…
Did I say anything wrong with source?
Did you bother to read the article?
I did … and nary a word on attribution.
If that doesn’t bother you … that is your problem.
Opinions differ.
http://www.shadowstats.com/alternate_data/gross-domestic-product-charts
What hurts Bernie voters is the leveling of US wages from post war monopoly of production status toward the world value of labor.
http://data.worldbank.org/topic/economy-and-growth?display=graph
I would guess – and it strictly a guess – that the revisions will be near nuetral.
It’s Obama’s last year in office and an election year.
I wouldn’t expect anything published in the next 6 months to damage Obama’s legacy or Clinton’s chances.
Revisions may be near neutral but it matters how
2014 up and 2015 down not good for GDP trends
I have overall effect down a bit
OMG, when, oh when, will the world move away from this meaningless statistic.
There are far more important thing than “GDP”: jobs, healthcare, family, education, reasonable return on savings to plan for retirement, a fair housing market not propped up by below market interest rates, the unconditional love from a loyal dog…and on and on.
What a joke….yet this is the kind of crap we are left to consider as a so-called critically important statistic of our well being as a society.
What percentage of statistics are false or misleading, again? Can’t remember if that percentage was revised up or down.
From the streets of coastal NorCal ( The real one, 6 hours north of the Bay Area), new cars running around everywhere, restaurants full, can’t buy a contractor let alone get a bid for home improvement work, houses getting multiple offers over asking, rents skyrocketing, Illinois, Michigan and other Midwest state license plates becoming more common sightings at Open Houses and at real estate offices, home improvement stores packed all day long,,,,sure beats Williston ND or Oil Patch TX.
But, who ever said GDP ain’t local? Aside fron economists and bureaucrats, that is?
Just like 1999 & 2005-6… what you are describing is EXACTLY what a Bubble (about to burst) looks like…
Its the same here in the greater Boston area (actually most of Eastern Massachusetts) — stores & restaurants are packed any night of the week, rents & home prices are skyrocketing across the board especially in the suburbs. large number of brand new homes being built & remodeled as well. Biggest issue facing businesses in this state is that there is a shortage of workers especially in IT.
California tax revenue slowing
May state revenues fell short of
projections in Gov. Jerry Brown’s
revised budget proposal by $154.3 million,
weighed down by corporation tax refunds
far higher than expected, State Controller
Betty T. Yee reported.
“The state’s other major taxes came close to
or exceeded estimates in May, so we should
not jump to conclusions about a downturn,”
said Controller Yee, the state’s chief fiscal
officer. “However, it is worth noting that
this is the second month in a row in which
overall revenues have fallen short. At this
point, the signals are mixed.”
http://sco.ca.gov/Files-EO/05-16summary.pdf
Six hours north of the Bay Area is no where’s ville! If one person came to town that would be a big bump in GDP! Now I live in LA, yeah there are lots of new restaurants going into business but lots of old ones doing good business going out of business. Why, lease was up and landlord hiking up the rents. Most of the new places fold their tents in a short time. I would say the number one driver of the economy here is debt. State and locals have been borrowing money like crazy. For instance several billion borrowed by the state for high speed train and the money then directed else where. Lots of young people with credit cards and lots of young people borrowing money to go to school which is a big industry in California. Unfortunately, the only jobs here are bartenders and waitresses. Lots of real estate also being sold but to foreigners. Walk down the main drag in WLA and you hear most people speaking a foreign language.
This post is quite obvious some one trolling, probably out of the Hitlary camp. Go Cass Sunstein!
By the way, the article below shows that California had a net leave of 1,000,000 people between 2004 and 2014 which cost approximately $26 billion. The latest numbers I have seen is this trend has continued. Please note that the population has gone up but that is because of h-1-b’s, immigration from outside of the US and illegal aliens (mainly illegal aliens) but California is a negative migration with in the US
http://www.sacbee.com/site-services/databases/article32679753.html
So much for your comment on the big inflow to people from other places in the US.
Just as an anecdote I saw a brand new Emergency Services vehicle for sale at a used car dealer down here in Florida. Must say it was the darndest this as that’s at least a quarter million dollars just sitting there not saving a single life.
Talk about a great homeless shelter though.
Governments do just run out of money folks.
Happens all the time.
Think this article is spot on. Any revision to an entire year’s growth would imply insolvency of the entire Republic.
State GDP uses the same measurement methodology as national GDI. The statistical discrepancy between national GDI and GDP has now widened to $274 billion.
https://fred.stlouisfed.org/graph/?id=GDPC1,A261RX1Q020SBEA,#
GDI, not GDP, may be revised lower.
See Yardeni from a year ago.
http://blog.yardeni.com/2015/06/sorting-out-statistical-discrepancy-in.html
I have reviewed the statistical analyses of how fast my grass grows over the last year. I am now revising my model to include weeds which will…. Who cares.