The Bureau of Economic Analysis released their initial estimate for Q2 2015 GDP in the United States. However, these are just the initial “advance” estimates for the current GDP growth rate, which the BEA warns are “based on source data that are incomplete or subject to further revision by the source agency.”
The BEA regularly updates its estimates of the US economy as they continue to gather more data: later survey responses, more tax information, and similar other late-breaking sources. In addition to their ongoing efforts to improve and correct their measurements, which result in two revised GDP estimates in the months after the advance numbers, every year the BEA does a more thorough set of corrections to GDP for recent years.
The BEA makes annual tweaks to their overall methodology to get a better picture of what’s happening in the world’s largest economy. This year, one of the most anticipated features in the methodology update was a change to their seasonal adjustment factors.
There are recurring annual events that greatly affect the US economy, like the Christmas holiday or the influx of high school and college students looking for summer jobs into the labour market at the start of each summer. Statistical agencies like the BEA and the Bureau of Labour Statistics adjust measures like GDP or the unemployment rate to compensate for these mostly predictable events, giving us a better picture of underlying trends in the economy.
In recent years, GDP growth in the first quarter of each year has been much lower than we could have expected. Many commenters noted that part of that first quarter weakness could have been the result of somewhat faulty seasonal adjustments on the part of the BEA, and the new revisions have increased GDP growth for three of the last for first quarters:
In particular, the previously abysmal looking first quarter of this year was revised up from a shrinking rate of -0.2% to a small but positive growth rate of 0.6%.
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