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Can We Trust BEA's Quarterly Reports on the GDP?
Raymond Richman, 7/29/2011

The report of the Bureau of  Economic Analysis of the Department of Commerce on the 2nd quarter GDP released today, Friday, July 29, 2011, indicates that the statistical agency may have become politicized. Readers of this site may be aware that we complained recently that the Bureau of Labor Statistics report on unemployment claims likewise showed evidence of political influence. It is not so much that either agency falsified data but they presented the data in such a way as to give the reader a false impression. This is how the BEA’s analysis released Friday July 29, 2011 began:  

"National Income and Product Accounts
Gross Domestic Product: Second Quarter 2011 (Advance Estimate)

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 1.3 percent in the second quarter of 2011,(that is, from the first quarter to the second quarter), according to the "advance" estimate released by the Bureau of Economic Analysis.  In the first quarter, real GDP increased 0.4 percent.(italics ours)" We believe that it may have actually decreasedl

The release of the 1st quarter, 2010, results in April, 2011, read: 

"Gross Domestic Product, First Quarter 2011 (second estimate). 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 1.8 percent in the first quarter of 2011, (that is, from the fourth quarter to the first quarter), according to the "second" estimate released by the Bureau of Economic Analysis."   

These data were confirmed in a second estimate released in May. 2011:   

"Gross Domestic Product, First Quarter 2011 (second estimate). 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 1.8 percent in the first quarter of 2011, (that is, from the fourth quarter to the first quarter)", according to the second estimate released by the Bureau of Economic Analysis. 

And here is the third estimate:  

"Gross Domestic Product: First Quarter 2011 (Third Estimate). 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 1.9 percent in the first quarter of 2011, (that is, from the fourth quarter to the first quarter)", according to the "third" estimate released by the Bureau. 

The statement of first quarter, 2011, results stated that in the first quarter real GDP increased from 0.4 percent in the first quarter whereas the foregoing data showsa an increase in the first quarter of  1.8 and 1.9 percent, indicating a decrease of 0.5. or 0.6 percent, not an increase.  

The following table shows the the contributions of each of the major categories to GDP growth during each of the most recent four quarters, according to the revised BEA data:

Contributors to Real GDP Growth
Year 2010-3 2010-4 2011-1 2011-2
Household Consumption 1.8% 2.5% 1.5% 0.1%
Business Fixed Investment 0.3% 0.9% 0.2% 0.7%
Government Consumption 0.2% -0.6% -1.2% -0.2%
Net Exports -0.7% 1.4% -0.3% 0.6%
Inventory Change 0.8% -1.6% 0.3% 0.0%
Total Change in Real GDP 2.5% 2.3% 0.4% 1.3%

If the BEA had not revised downward its estimates for earlier quarters, this quarter would have clearly been a disaster. Here is how the statistics for the last four quarters would look, using statistics for the previous three quarters as downloaded from the BEA's website on June 20:

Contributors to Real GDP Growth
Year 2010-3 2010-4 2011-1 2011-2
Household Consumption 1.7% 2.8% 1.5% -2.8%
Business Fixed Investment 0.2% 0.9% 0.3% -0.7%
Government Consumption 0.7% -0.3% -1.0% -1.1%
Net Exports -1.7% 3.2% 0.0% -0.2%
Inventory Change 1.6% -3.2% 1.1% -0.1%
Total Change in Real GDP 2.5% 3.1% 1.8% -5.1%

If the BEA had not revised its previous quarter statistics then this quarter's statistics would have shown that the economy is declining at a 5.1% annual rate.

One thing that the revised BEA statistics show clearly is that the economy is below the real GDP level achieved in the fourth quarter of 2007. During that quarter, real GDP was $13.33 trillion in 2005 dollars. During the second quarter, according to this advanced estimate, it was $13.27 trillion in 2005 dollars. The U.S. economy has been in a depression since the fourth quarter of 2007.

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Comment by aaron fleszar, 7/31/2011:

I thinks so, but you know one thing about math like this it can get fuzzy. Here's a more interesting story.

A Coup d'etat took place during the 2008 presidential election.

Obama is not the president, he’s the acting president. He disappeared for 2 weeks after his election win only to reappear looking exhausted sitting next to John McCain, with a bad poker face, for a press photo shoot. Obama is now a Pentagon puppet.

Here’s what Obama, Osama, Biden, Bin Laden, the FBI’s Most Wanted Terrorists, and Sarah Palin had to do with the last presidential election and the military’s overthrow of our government.  Thousands of people are learning about this and sharing it everyday. Help us restore our democracy now.

http://ElectNoMoreSpys.blogspot.com/


Comment by Scott Lindsay, 7/31/2011:

Thanks for this report. But let's take the kid gloves off here. Let's not sugarcoat things. Saying that the BEA "may have become politicized" is overly generous, in my opinion. Here's the truth - they're LYING. They are deliberately misleading the public and ought to be called to account for it. People go to jail for this sort of thing all the time. But if you work for the federal government - it's standard practice. 




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