Craig Torres — U.S. Stats Officials Say Measurements of GDP, Inflation Are Off

Top officials from two U.S. government economic-statistics agencies said their measurement tools are understating growth and overstating some components of inflation by modest amounts, while cautioning that this doesn’t explain the sluggish expansion in recent years....

Bloomberg
U.S. Stats Officials Say Measurements of GDP, Inflation Are Off

Craig Torres

ht Yves Smith at Naked Capitalism

circuit — Nod to the St. Louis Fed: NIPA tables now on FRED

This is news worth sharing for all those policy wonks out there. The St. Louis Fed has added over 10,000 new data series from the Bureau of Economic Analysis (BEA) National Income and Product Account tables to its excellent FRED database and research tool. FRED now counts over 70,000 series of data.

Fictional Reserve Banking
Nod to the St. Louis Fed: NIPA tables now on FRED
circuit

CMI Report — BEA Adjusts Second Quarter GDP Growth Rate Upward

Summary

Even at face value the reported 1.34% growth rate is either sluggish or pathetic, depending on your chosen inclination to spin. When a more reasonable "deflater" is used to calculate the "real" numbers, the second quarter is actually shown to be in contraction. And when using such alternative BLS inflation data the most recent past quarter is the 2nd consecutive "real" quarter to have such negative growth -- meeting one of the common definitions of a new recession.

The restive public clearly understands this -- even if the academicians at the BEA don't. The public has been seeing their (per-capita) "slice of the pie" contract now for six months, and no amount of well spun "sluggish growth" can alter their view of a shrinking reality.

See complete CMI report at Consumer Metrics Institute, BEA Adjusts Second Quarter GDP Growth Rate Upward

CMI: "Great Recession Far Worse Than We Were Previously Told"

The Real Problem

The greatest problems in the report, however, were the massive revisions to past history -- including the very recent past. For both the first quarter of 2011 and the worst quarters of the "Great Recession" those revisions were substantial enough to raise questions about the reliability of any of the recently reported BEA data:

-- Data published as recently as 35 days prior had growth rates slashed by over 80%.

-- The worst quarter of the "Great Recession" was revised downward by over 2%, with the annualized "growth" rate now reported to be a horrific -8.9%. And the "peak" to "trough" decline in real GDP for the "Great Recession" is now recognized to be over 5%, halfway to the clinical definition of a full depression.

We have been concerned for some time about the timeliness of the BEA's data, particularly given how much the nature and dynamics of the economy have changed since Wesley Mitchell initially developed the data collection methodologies in 1937. These past revisions, however, lead us to believe that the problems run far deeper -- as demonstrated by a quarter that is now over 2 years old being just now revised downward by an additional 2%. This begs two simple questions:

-- At what point in time can we trust any of the data contained in these reports?

-- How can any of the current data be used to create meaningful Federal monetary or fiscal decisions?

We wonder what Mr. Bernanke thought when told that 80% of his "relatively slow recovery" during the first quarter had just vaporized ...

Read the whole CMI report here: BEA Reports 1Q-2011 and "Great Recession" Far Worse Than We Were Previously Told

UPDATE

Edward Harrison at Credit Writedowns: Disastrous GDP numbers make double dip scare real