Differences in Early GDP Component Estimates Between Recession and Expansion

Tara Sinclair and Herman Stekler

Working Papers from The George Washington University, Institute for International Economic Policy

Abstract: In this paper we examine the quality of the initial estimates of the components of both real and nominal U.S. GDP. We introduce a number of new statistics for measuring the magnitude of changes in the components from the initial estimates available one month after the end of the quarter to the estimates available 3 months after the end of the quarter. We further specifically investigate the potential role of changes in the state of the economy for these changes. Our analysis shows that the early data generally reflected the composition of the changes in GDP that was observed in the later data. Thus, under most circumstances, an analyst could use the early data to obtain a realistic picture of what had happened in the economy in the previous quarter. However, the differences in the composition of the vectors of the two vintages were larger during recessions than in expansions. Unfortunately, it is in those periods when accurate information is most vital for forecasting.

Keywords: Flash Estimates; Data Revisions; GDP Components; Statistical Tests; Business Cycles (search for similar items in EconPapers)
JEL-codes: C53 C82 E32 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2011-02
New Economics Papers: this item is included in nep-cba and nep-for
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:gwi:wpaper:2011-05

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