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posted by martyb on Monday May 25 2015, @04:51AM   Printer-friendly
from the draw-graph-and-then-plot-points dept.

Bloomberg reports:

The way some parts of U.S. gross domestic product (GDP) are calculated are about to change in the wake of the debate over persistently depressed first-quarter growth.

In a blog post published Friday, the Bureau of Economic Analysis listed a series of alterations it will make in seasonally adjusting data used to calculate economic growth. The changes will be implemented with the release of the initial second-quarter GDP estimate on July 30, the BEA said.

Although the agency adjusts its figures for seasonal variations, growth in any given first quarter still tends to be weaker than in the remaining three, economists have found, a sign there may be some bias in the data. It's a phenomenon economists call "residual seasonality."

ZeroHedge reports:

In other words, as of July 30, the Q1 GDP which will have seen its final print at -1% or worse, will be revised to roughly +1.8%, just to give the Fed the "credibility" to proceed with a September rate hike which means we can now safely assume not even the Fed will launch a "hiking cycle" at a time when the first half GDP will print negative (assuming the Atlanta Fed's 0.7% Q2 GDP estimate is even modestly accurate).

Will abnormally "good" data be revised lower, or whether labor market data, which is already manipulated beyond comparison by the BLS will also be adjusted due to "residual seasonality"? Don't hold your breath.

 
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  • (Score: 3, Insightful) by Rich on Monday May 25 2015, @05:11PM

    by Rich (945) on Monday May 25 2015, @05:11PM (#187652) Journal

    I've never understood why GDP as a metric is such a fetish. Measuring progress by it credits each and every senseless waste of effort as unequivocally good. (cf "Broken Window Fallacy"). It's a bit like if I'm finished with work at 5 pm, I'd smash a window of my house, head to the DIY store, buy a new one, fix the broken window until 8 pm and say. "Wow. That's great! Did so much more than yesterday, so I'm way better off. But hey, there's still time left 'til midnight, I'm gonna smash it TWICE tomorrow, for the sake of growth."

    A balance sheet, to see what was gained or lost at the end of the day is much more useful to me, and I would imagine, to a nation as well. Of course that would raise questions how to tag a value on "being well", but that certainly wouldn't introduce more error to the overall metric than counting mindless waste as good, would it?

    Any macroscopic economic expert care to explain?

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  • (Score: 2) by bradley13 on Monday May 25 2015, @05:36PM

    by bradley13 (3053) on Monday May 25 2015, @05:36PM (#187662) Homepage Journal

    This is definitely a weakness of GDP as a metric. The freshly divorced guy who has a major heart attack, causing a massive accident on the highway - he has just caused a positive blip in the GDP. The fact that, in total, his actions destroyed rather that created? GDP does not capture that.

    Of course, it's not as simple as discounting all of that, either. Medical science does improve quality of life, so it can be productive. But where do you draw the line - how do you measure it fairly?

    That said, at least GDP has the benefit of being very simple to measure. When the government adjusts it? Well, that's like the way you tell if a politician is lying: it's because his lips are moving. When the government redefines GDP (or cost of living, or unemployment), you pretty much know that they are doing it to deceive the public.

    For anyone who doesn't know about it, be sure to visit Shadow Stats [shadowstats.com].

    --
    Everyone is somebody else's weirdo.
  • (Score: 0) by Anonymous Coward on Monday May 25 2015, @11:40PM

    by Anonymous Coward on Monday May 25 2015, @11:40PM (#187781)

    I'll give you a simpler scenario.

    You go dig a ditch, and then refill it, and have your buddy pay you $10.

    Have your buddy dig a ditch, and then refill it, and you pay him $10.

    Now GDP increased by $20.

    Yeah, (macro)econ stats are like that.