GDP and economic statistics

his morning, the BEA released the preliminary estimates of 3rd quarter Gross Domestic Product. Last month’s advanced estimate was a paltry 1.6%, a number low enough to make many economists worry about a slowdown. But today, we find that the real number is 2.2%. A big difference. The revision was due to fewer imports than expected and a greater accumulation of inventories (neither of which good news in and of themselves but are positive in that they increase the total GDP).
The size of the revision should prompt a moment of reflection about our economic statistics. We often complain that our current statistics don’t give us an accurate picture of the I-Cubed Economy. But even long-accepted statistics are not infallible — as is shown by this revision to a number which we all feel is a pretty good indicator. As we move forward with revamping our economic statistics, let us keep in mind the fallibility of the numbers. As the old saying goes, there are lies, damned lies and statistics.

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