Wednesday, September 03, 2014
A big day for data revisions
Posted by David Smith at 12:00 PM
Category: Thoughts and responses

Today's revised GDP and balance of payments data, taking us up to 2012, confirm what some of us have long suspected, that the recovery in recent years has been stronger than was initially reported.

The new numbers show that the peak-to-trough fall in GDP in 2008-9 was 6% rather than 7.2%, and that pre-crisis growth was somewhat weaker than earlier estimates. So growth in 2004 is revised down from 3.2% to 2.5%, 2005 from 3.2% to 2.8%, while 2006 is up from 2.8% to 3%, and 2007 down from 3.4% to 2.6%.

But the post-crisis recovery is significantly stronger, with 2010 up from 1.7% to 1.9%, 2011 from 1.1% to 1.6%, and 2012 from 0.3% to 0.7%. Some people got badly overexcited over double and triple-dips but we were never close.

The figures imply that when figures up to 2014 are released on September 30, they will show that the pre-crisis level of GDP was exceeded last year, and that GDP is currently some 2.7% above that pre-crisis peak. There is a good summary of the changes here.

We should remember that these are mainly the effect of methodological changes, plus reweightings. There are plenty more data revisions to come. These figures do not solve the productivity puzzle - it is still some 12% below its pre-crisis trend. Later changes may help to do so.