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