Quarterly GDP Revisions

While the most notable aspect of today's GDP report was the sharp downward revision to last quarter's growth rate (1.9% down to 0.4%), there were some other big revisions to quarterly growth.  In the chart below, we highlight US quarterly GDP figures with and without the revisions announced today.  Below that we also show the spread between the previously reported numbers and today's revisions.  

Along the same lines of the Q1 downward revision, today's revisions show that the downturn was sharper than previously thought as Q4 08 GDP was revised from a decline of 6.8% down to a decline of 8.9%.  Just as the downturn was weaker than originally thought, the snapback was also less robust.  Prior to today, Q4 09 GDP was previously thought to have increased by 5.0%, but in today's revisions that growth rate was lowered to 3.8%.  Looking at the bright side, today's revisions showed that Q2 10 GDP rose by 3.8% versus a previously reported growth rate of 1.7%.

While today's revisions are considered important so that economists and investors can more accurately compare the recent past to other periods, with all the revisions we see in statistics that are more than a few years old, it's a wonder that people pay any attention to them at all.

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