Tuesday, May 26, 2015

New GDP Series From BEA

BEA's "new product" (see below) -- a U.S. GDP estimate that's a simple average of expenditure- and income-side GDP estimates -- is not yet at the cutting-edge of historical GDP estimation.

On the benefits of blending the expenditure- and income-side historical GDP estimates, see ADNSS1 for a forecast-combination perspective and ADNSS2 for a Kalman-filtering signal-extraction perspective.  The ADNSS1 "combined" GDP estimate is a convex combination of expenditure- and income-side GDP estimates, but the BEA equal-weight case is very special and generally sub-optimal. Moreover, ADNSS2's Kalman-filter approach is likely superior to ADNSS1's convex-combination approach for reasons detailed by ADNSS2, and for some years now it has been implemented and published to the web by FRB Philadelphia as "GDPplus".

Neverthess, I applaud the BEA's new averaged GDP. If it's not at the cutting edge, it's nevertheless much superior to the standard approach of doing nothing -- that is, using expenditure-side GDP alone -- and it's an official acknowledgment of the wastefulness of doing so. Hence it's a significant step in the right direction. Hopefully its publication by BEA will nudge people away from uncritical and exclusive reliance on expenditure-side GDP.    

May 14, 2015
Twitter: @BEA_News

Coming in July: 
BEA to Launch New Tools for Analyzing Economic Growth

WASHINGTON – The Bureau of Economic Analysis plans to launch two new statistics that will serve as tools to help businesses, economists, policymakers and the American public better analyze the performance of the U.S. economy. These tools will be available on July 30 and emerge from an annual BEA process where improvements and revisions to GDP data are implemented. BEA created these two new tools in response to demand from our customers.

Average of Gross Domestic Product (GDP) and Gross Domestic Income (GDI)

-- BEA will launch a new series that is an average of GDP and GDI, giving users another way to track U.S. economic growth.

-- BEA will present a nominal (or current-dollar) measure of the series and an inflation-adjusted (or chained-dollar) measure of the series.

-- For current dollars, the new measure will be a simple, equally weighted average of GDP and GDI for any given quarter or year.

-- For chained dollars, the new measure will be the current-dollar value deflated by the GDP price index.

-- The new series will be available back to 1929 on an annual basis and to 1947 on a quarterly basis.

-- The new series will not only provide users with another barometer on the U.S. economy but also make available series that several independent experts have recommended using in their analysis of the nation’s economic growth.

-- The new series could help account for known measurement inconsistencies between the two statistics. Those may include timing differences, gaps in underlying source data, and survey measurement errors.

-- The new statistics will be available in BEA’s interactive database as well as in the GDP news release tables.