Dollars and Jens
Friday, July 30, 2004
revised GDP data
With the 2Q advanced GDP numbers released this morning were also released revisions to previous data.
Republicans and Democrats have been fighting for months about who is to blame for the recession of 2001. Now it looks as if there might not even have been a recession, at least according to one definition.
With the revised data, there no longer exist two consecutive quarters of negative GDP growth in 2001. Two negative quarters of growth is one rule of thumb as to what makes a recession.

Professional economists have a different standard for recessions, one that is not affected by the revisions announced Friday. The professionals' definition relies on other indicators of economic health, especially employment, which fell sharply in 2001 and still has not reclaimed its pre-recession level.
Actually, the assertion that professional economists use "a ... standard" isn't strictly true. It's largely decided by the educated whim of the National Bureau of Economic Research. "At the moment, the NBER says the recession lasted eight months from March 2001 until November 2001."

There was a bit of "controversy" with the release of the 2004 Economic Report of the President because it contains a lot of charts and comparisons that use October 2000 as the beginning date of the recession. This date was based on revisions made to data after the NBER had announced March 2001 as the peak; the revised data are used in the charts and comparisons, and frankly they would look goofy if the administration had tried to shoe-horn them into the NBER date. If the NBER were going to issue a correction, though, I would expect it to have come by now; I expect the March date to hold, basically out of a combination of initial ignorance and later inertia.

I might as well note that the figure for second quarter 2004 growth came in at (annualized) 3.0%, well under the expected 3.7%. This is subject to two revisions, and while we saw a revision last fall as large as from 7.2% to 8.2%, I don't expect we'll see any changes that big to this number.

Update: That quarter that was revised from 7.2% to 8.2% has now been revised to 7.4%.

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