Rapid Estimates of U.S. GDP:
Timeliness, Estimating Methods & Accuracy
Dave Wasshausen
International Seminar on Timeliness, Methodology and
Comparability of Rapid Estimates of Economic Trends
Ottawa, Canada
www.bea.gov
May 27-29, 2009
Timeliness
▪ “Advance” estimates of GDP released toward
the end of the first month after the end of the
quarter.
 Based on partial source data and BEA assumptions
 Complete set of expenditures estimates; partial set
income estimates
 Corporate profits and net interest are not prepared
due to insufficient source data
www.bea.gov
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Timeliness
▪ Tradeoff between quality and timeliness
 Try to strike the appropriate balance
between accuracy and timeliness
 BEA releases several “vintages” of GDP
estimates, each subsequent vintage based on
better source data
www.bea.gov
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Share of Source Data for Quarterly
Estimates of GDP
www.bea.gov
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Source Data for Advance Estimate
▪ Three months of source data are available for:
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Consumer spending on goods
Shipments of capital goods excluding aircraft
Motor vehicle sales and inventories
Manufacturing durables inventories
Federal government outlays
Consumer, producer and international prices
▪ Only two months of data are available for most
other key source data (including construction
spending, foreign trade, & remaining inventory
series)
www.bea.gov
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Estimating Methods
▪ Retail Control Method
▪ Commodity Flow Method
▪ Price-Times-Quantity Method
▪ Judgmental Trend
▪ Imputations
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Revisions and Accuracy
▪ Revisions and accuracy are related, but not the
same
 Some of the most inaccurate data have never been revised
 Some of the most accurate data are subject to regular
revisions
▪ Revisions must be judged against average
growth and volatility in growth
▪ Publish regular revision studies (Feb. 2008)
www.bea.gov
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Revisions
▪ Single largest source of revisions is
updating of seasonal factors
▪ Largest source of revisions in trend
growth is changes in concepts, methods,
and source data intended to update the
accounts and improve accuracy.
www.bea.gov
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Accuracy
▪ Current quarterly estimates of real GDP
correctly indicate:
 Direction of change 98 percent of the time
 Whether accelerating or decelerating 74 percent of
the time
 Whether growth is above, near, or below trend
growth more than three-fifths of the time.
▪ Estimates have also been shown to be unbiased, with no identifiable bias from the
introduction of real time data
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Comparisons of Revisions to GDP
Vintages
compared
Advance to preliminary…
Advance to final…………
Advance to latest……….
Average
Average without
regard to sign
Current-dollar GDP
0.2
0.5
0.2
0.7
0.4
1.1
Real GDP
Advance to preliminary…
Advance to final…………
Advance to latest……….
www.bea.gov
0.1
0.1
0.3
0.5
0.6
1.2
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Revisions to Real GDP estimates
Real GDP Growth Rate: Quarters, 2008
4.0
3.3
2.8
1.9
2.0
0.6
0.9 1.0 0.9
0.0
-0.3 -0.5 -0.5
-2.0
-4.0
-3.8
-6.0
-6.2 -6.3
-8.0
08Q1
www.bea.gov
08Q2
Advance
Preliminary
08Q3
Final
08Q4
Annual Revision
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Revisions to GDP for QII, QIV
▪ Large changes in energy prices (upward
in QII, downward in QIV).
 Wedge between GDP and Gross domestic
purchases prices.
 Inventory valuation adjustment.
▪ Difficulty of projecting data for the
missing month.
▪ Importance of publishing “key
assumptions.”
www.bea.gov
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Conclusion
▪ BEA’s goal: Early estimates that provide users with a
useful “snapshot” of the economy (in the aggregate and
by component)
▪ BEA’s early estimates do a relatively good job providing
an overall picture of economic activity. In general, they
tell us:
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www.bea.gov
If the economy is expanding or contracting
If growth is accelerating or decelerating
If growth is high or low relative to trend
What major components are contributing to growth
The timing of business cycle peaks and troughs
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