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BEA on the eve of comprehensive NIPA revision

Revisions to GDP over the past five years have incorporated a wealth of new sources of data that may significantly change our understanding of the evolution of economic activity ( Discussion Claudia Sam) (Last year’s annual revisions, by comparison, didn’t really change the outlook).

Here’s what we know about GDP, GDO, GDI and GDP+, as well as a live forecast for GDP.

figure 1: GDP (blue), GDI (green), GDO (orange), GDP+ (red), GDPNow (sky blue square), New York Fed live forecast (pink triangle), all in billions for the 2012 season exchange rate after adjustment. The GDP+ level is based on the GDP level in the fourth quarter of 2019. Source: BEA 2023 Q2 Second Release, Federal Reserve Bank of Philadelphia, Atlanta Fed (9/27), and New York Fed (9/22) and author’s calculations.

If GDP is revised downwards, the live forecast can be considered to be pulled down (while the growth rate from Q2 2023 to Q3 2023 remains unchanged since the GDP live forecast is expressed in growth rates).

Is GDP likely to be revised downward?According to records Economic Commission for Europe (2015) and Nalervik and Braun (BPEA, 2011)which is a possible result, with GDP reverting more to GDO than would otherwise be the case. In recent seasons, GDI growth is more likely to be the revised GDP growth rate.

Bank of East Asia(2022) Reports the revised scale from the lead year to the final year.

source: Bank of East Asia(2022).

Interestingly, the pre-revision growth rate appears to be unbiased relative to the final estimate. However, the RMSE is 1% (MAE is 1.2%).Therefore, even without indicating direction, one can say that significant changes are not impossible (which is why The NBER Business Cycle Dating Committee does not rely primarily on GDP – look 2001 recession).

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