Or are they just that predictable?
Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 2.8 percent in the third quarter of 2009, (that is, from the second quarter to the third quarter), according to the “second” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP decreased 0.7 percent. The GDP estimate released today is based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, the increase in real GDP was 3.5 percent (see “Revisions” on page 3).
You may recall my warning that the 3.5 percent figure in the Advance report would be revised downward on the day it was published. Now, according to the BEA’s newly revised estimate, only 1.3 percent of GDP growth was NOT provided by Cash for Clunkers. So, if you consider the even larger stimulus provided by the $8k housing credit, which is not separately accounted for, it is quite obvious that economic activity is still contracting even if the GDP statistic is not. This won’t be the last revision for 3Q09… and I’m not talking about the scheduled third report, formerly known as the Final one, either.
UPDATE – And in the “Why I should never be allowed on the radio” category, we have tonight’s performance on a national show. I explained how the economic pain of a contraction shouldn’t be confused with the actual cause of the problem by using the analogy of a sexually transmitted disease. Halfway through, I stopped and said “Okay, that’s probably a terrible analogy.” The host concurred and said that he preferred to compare a contraction to chemo. In retrospect, I don’t think that actually works as well, however, because the salient point is that the damage is actually done during the good times and the resulting pain is merely the natural consequence of the damage.