Are official GDP growth statistics wrong?

[muon2]

The Bureau of Economic Analysis within the Department of Commerce updates the real GDP of previous quarters with each release of new numbers. The most recent release last week showed a significant downward revision of 2007 Q4 from +0.6% to -0.2%. This now shows one quarter of decline in real GDP. A future downward revision for 2008 Q1 from +0.9% could easily set up the two consecutive quarter contraction benchmark for a recession.

In any case contraction in real GDP is not the official measure of a recession. The actual determination is made by the independent National Bureau of Economic Research. They consider a number of factors in addition to real GDP to make a determination that a recession has occurred. Usually they reach that determination on a time scale of about 12 months after the event, so the media focuses on real GDP as a benchmark that can be judged more quickly.

[muon2]

I wouldn't be surprised if some months from now we find that there was a recession declared starting late last year and through the early part of this year. I equally would be unsurprised if as we speak the economy had started to right itself. Real GDP was negative in the last quarter of 2007, payroll employment has been negative for the first six months of 2008, and real personal income slowed its growth in the same period from annualized rates of 3-5% to about 1%. I expect second quarter GDP and personal income is going to be up due to the federal stimulus checks.

Since the Great Depression recessions have lasted from 6 to 16 months. The last two have each been 8 months. There's no reason to expect a recession to be outside that range this year.

[muon2]

And the final results are in, official GDP growth statistics WERE wrong.

http://news.yahoo.com/s/ap/20081201/ap_on_bi_ge/recession

You don't understand. NBER uses its own methodology, not the two quarters of recession methodology. Quarterly growth is still listed as +1.9% for Q2 2008.

Thank you. I tried to explain that in August earlier in the thread.

The Bureau of Economic Analysis within the Department of Commerce updates the real GDP of previous quarters with each release of new numbers. The most recent release last week showed a significant downward revision of 2007 Q4 from +0.6% to -0.2%. This now shows one quarter of decline in real GDP. A future downward revision for 2008 Q1 from +0.9% could easily set up the two consecutive quarter contraction benchmark for a recession.

In any case contraction in real GDP is not the official measure of a recession. The actual determination is made by the independent National Bureau of Economic Research. They consider a number of factors in addition to real GDP to make a determination that a recession has occurred. Usually they reach that determination on a time scale of about 12 months after the event, so the media focuses on real GDP as a benchmark that can be judged more quickly.

I also note that I had half my prediction right about the start of the recession. Unfortunately I didn't foresee the depth of the second wave meltdown in September, so it looks like it will be hard to keep this recession to within the 6 to 16 month window of post-Depression recessions.