GDP Caveats

Justin Fox puts today's GDP numbers in perspective:

We're probably out of the recession, but it's still impossible to tell if we're in much of a recovery. This is partly because of a litany of cautionary notes that need to be sounded every time a GDP number, especially an "advance estimate" like today's, comes out.

Some economic releaseslike the weekly jobless claims number released todayare raw data. Many others involve some extrapolation from a survey sample, but are still effectively data releases. GDP, by contrast, is an estimate, put together by perhaps the most understaffed of government statistical agencies, the Commerce Department's Bureau of Economic Analysis, with data from a plethora of sources and a bunch of guesswork. It will be revised in a month, revised again a month after that, then revised again a couple years down the road. The final number could end up pretty much anywhere between 1% and 6% (or even beyond: the initial GDP growth estimate for the first quarter of 2000 was 5.4%; it has since been revised all the way down to 1.1%). And even that final number will involve estimates and assumptions (especially those involving the inflation rate) that some might take issue with. Beyond all that, there are the usual questions about whether high unemployment, continuing financial troubles or other factors might drag the economy back down in the coming months.