4 Takeaways From a Long-Term G.D.P. Revision

[The economy grew at a 4.1 percent annual rate in the last quarter, the government said Friday.]

The statisticians concluded America’s imported cellphones were improving more rapidly than previously calculated — that consumers had actually gotten more for their money than we thought. That change had a ripple effect, all the way up to annual economic growth figures, which emerged from the revisions ever so slightly changed from previous estimates.

Here are four takeaways from the total package of revisions:

The economy under President Obama was better than advertised

Revisions added $82.7 billion to the size of the United States economy at the end of 2016, which means it grew a tenth of a percentage point faster in President Barack Obama’s second term than previously thought. Growth in President Trump’s first year in office, 2017, was actually smaller by the same amount.

That’s not an economic earthquake, but the headline change does mask some bigger swings in individual components of gross domestic product. For example, companies appear to have invested $110 billion more in 2012 than previously thought, largely because the statisticians more or less missed some huge corporate spending on cloud computing technology. The revisions employed improved measures of I.T. investments, and voilà.

Winter’s not as cold as it seemed

For a while now, experts at the Bureau of Economic Analysis have struggled with something called seasonal adjustment, which is their way to rebalance raw economic data to allow for an apples-to-apples comparison of growth at different times of the year. Even after two rounds of fixes, growth in the first quarter, which includes most of the winter, has consistently run lower than subsequent quarters. This revision brought what the bureau said were the final batch of fixes, and it has changed past winter numbers to look much better — and made some quarters from later in the year look worse.

Growth in the first quarter of 2016 has been revised up to 1.5 percent, from 0.6 percent. Growth in the fourth quarter of 2017 was revised down to 2.3 percent, from 2.9 percent. (That revision complicates Republican claims that growth was surging with companies’ expectation that President Trump would sign a big tax cut package into law, by the way, but the revision for the first quarter of 2018 that is announced Friday could help their case that the enactment of the law sped up growth.)

Article source: https://www.nytimes.com/2018/07/27/business/economy/revised-gdp-report.html?partner=rss&emc=rss