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Rapid Estimates of U.S. GDP:. Timeliness, Estimating Methods & Accuracy. Dave Wasshausen. International Seminar on Timeliness, Methodology and Comparability of Rapid Estimates of Economic Trends Ottawa, Canada May 27-29, 2009. Timeliness.

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rapid estimates of u s gdp

Rapid Estimates of U.S. GDP:

Timeliness, Estimating Methods & Accuracy

Dave Wasshausen

International Seminar on Timeliness, Methodology and Comparability of Rapid Estimates of Economic Trends

Ottawa, Canada

May 27-29, 2009

timeliness
Timeliness
  • “Advance” estimates of GDP released toward the end of the first month after the end of the quarter.
    • Based on partial source data and BEA assumptions
    • Complete set of expenditures estimates; partial set income estimates
    • Corporate profits and net interest are not prepared due to insufficient source data
timeliness3
Timeliness
  • Tradeoff between quality and timeliness
    • Try to strike the appropriate balance between accuracy and timeliness
    • BEA releases several “vintages” of GDP estimates, each subsequent vintage based on better source data
source data for advance estimate
Source Data for Advance Estimate
  • Three months of source data are available for:
    • Consumer spending on goods
    • Shipments of capital goods excluding aircraft
    • Motor vehicle sales and inventories
    • Manufacturing durables inventories
    • Federal government outlays
    • Consumer, producer and international prices
  • Only two months of data are available for most other key source data (including construction spending, foreign trade, & remaining inventory series)
estimating methods
Estimating Methods
  • Retail Control Method
  • Commodity Flow Method
  • Price-Times-Quantity Method
  • Judgmental Trend
  • Imputations
revisions and accuracy
Revisions and Accuracy
  • Revisions and accuracy are related, but not the same
      • Some of the most inaccurate data have never been revised
      • Some of the most accurate data are subject to regular revisions
  • Revisions must be judged against average growth and volatility in growth
  • Publish regular revision studies (Feb. 2008)
revisions
Revisions
  • Single largest source of revisions is updating of seasonal factors
  • Largest source of revisions in trend growth is changes in concepts, methods, and source data intended to update the accounts and improve accuracy.
accuracy
Accuracy
  • Current quarterly estimates of real GDP correctly indicate:
    • Direction of change 98 percent of the time
    • Whether accelerating or decelerating 74 percent of the time
    • Whether growth is above, near, or below trend growth more than three-fifths of the time.
  • Estimates have also been shown to be un-biased, with no identifiable bias from the introduction of real time data
revisions to real gdp estimates
Revisions to Real GDP estimates

Real GDP Growth Rate: Quarters, 2008

revisions to gdp for qii qiv
Revisions to GDP for QII, QIV
  • Large changes in energy prices (upward in QII, downward in QIV).
    • Wedge between GDP and Gross domestic purchases prices.
    • Inventory valuation adjustment.
  • Difficulty of projecting data for the missing month.
  • Importance of publishing “key assumptions.”
conclusion
Conclusion
  • BEA’s goal: Early estimates that provide users with a useful “snapshot” of the economy (in the aggregate and by component)
  • BEA’s early estimates do a relatively good job providing an overall picture of economic activity. In general, they tell us:
    • If the economy is expanding or contracting
    • If growth is accelerating or decelerating
    • If growth is high or low relative to trend
    • What major components are contributing to growth
    • The timing of business cycle peaks and troughs
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