What You See Is Not What You Get in GDP

And here come the revisions.
The US economy, as measured by ‘real’ GDP (adjusted for a version of inflation) grew 0.74% in the third quarter, compared to the prior quarter. That was a tad slower than the 0.76% growth in Q2, but up from the 0.31% growth in Q1.
GDP was up 2.3% from a year ago.
To confuse things further, in the US, we cling to the somewhat perplexing habit of expressing GDP as an ‘annualized’ rate, which takes the quarterly growth rate (0.74%) and projects it over four quarters. This produced the annualized rate of 2.99%, or as we read this morning all over the media, ‘3.0%.’
This was the ‘advance estimate’ by the Bureau of Economic Analysis. The BEA emphasizes that the advance estimate is based on source data that are ‘incomplete or subject to further revision by the source agency.’ These revisions can be big, up or down, as we’ll see in a moment.
The BEA will release the ‘second estimate’ for Q3 on November 28 and the ‘third estimate’ on December 21. More revisions are scheduled over the next few years.

This post was published at Wolf Street by Wolf Richter ‘ Oct 27, 2017.