December 20, 2007

Final 3Q07 GDP Comes in at 4.9%; Something About 2000

Filed under: Economy,Taxes & Government — Tom @ 10:39 am

The release from the Bureau of Economic Analysis is here. The final result is the same as the preliminary one issued last month.

The last time the economy went from such a strong positive to a negative, as some pundits are predicting, was from the second to third quarter of 2000 (+6.4% to -0.5%).

2000? I thought that was the rip-roaring greatest economy ever. That’s what everyone was telling us during the 2000 election campaign.

We all thought it was great at the time, and had reason to believe it. After all, the announced changes in GDP during the three quarters before Election Day in 2000 were:

  • 5.5% – 1st Quarter 2000
  • 5.6% – 2nd Quarter 2000
  • 2.7% – 3rd Quarter 2000 (advance esimate, issued in late Oct.; final GDP growth published in December 2000 was 2.2%)

But the official figures for the three quarters involved, after BEA did its comprehensive revisions, are now 1.0%, 6.4%, and -0.5%. Those percentages differ from the original announcements by -4.5%, +0.8%, and -3.2% (-2.7% from final figure in December), respectively.

Recent after-the-fact comprehensive changes during the 2-1/2 years I have been following GDP closely have, I believe, never been more than 1.0% in any one quarter.

It’s very hard to imagine that differences of the size that occurred in 2000 weren’t due to something besides ordinary estimating errors. So excuse me for thinking that there may (emphasis “may”) have been some data manipulation going on over at BEA in the Spring and Summer of 2000.

Put it this way: Do you think a miserable first quarter GDP report, or a negative third quarter report issued about a week before the Bush-Gore 2000 vote, would have mattered?

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UPDATE: I have asked someone from BEA to explain the 2000 changes, and have been promised a response. We’ll see.

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