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We are getting unusually different readings of the economy right now. Over the last four quarters GDP grew by a strong 3.2%. But another measure of the same concept, GDI, was a tepid 1.8%.
We have rarely seen gaps this large. The last time we did was in the Great Recession.
We have rarely seen gaps this large. The last time we did was in the Great Recession.
Remember, these are all very rough numbers that will get revised substantially over time.
In May 2008 BEA announced GDP had grown 2.5% over the previous four quarters (buried in the release it had 1.0% for GDI). Their latest data shows GDP growth was only 1.1% over that period.
In May 2008 BEA announced GDP had grown 2.5% over the previous four quarters (buried in the release it had 1.0% for GDI). Their latest data shows GDP growth was only 1.1% over that period.
In early 2008 you would have been better served ignoring the rosy GDP numbers and just looking at GDI. In general the best predictor of revised GDP is the average of the 2, sometimes called GDO. This is up 2.5% this past year but only 1.8% (annual rate) in the last two quarters.
The recent strong jobs numbers are probably more accurate (although they will also get revised). So if GDP does eventually get revised down, this would suggest that the glimmer of a productivity revival we have seen in the last year may actually have been a mirage.
