GDP growth was revised down, as expected, in today’s NIPA preliminary GDP release. At 0.6% q/q growth SAAR was below Bloomberg consensus of 0.8%. But even more revealing is the pattern in recent revisions; in addition, trade adjustment looks a bit further off.
First, one interesting aspect of the current and previous quarter’s revisions from advance to preliminary is shown in Figure 1.
Figure 1: Log Real GDP, 06Q4 advance (blue), preliminary (red), final (green) and 07Q1 advance (black), preliminary (teal). Source: BEA, NIPA, various releases.
The revision was negative in 06Q4 going from advance to preliminary (going from blue to red). In 07Q1, the revision was once again negative going from advance to preliminary (going from black to teal). This is interesting given that on average over the 1983-2003 period, the growth rates were revised upward on average 0.1 percentage points. This reminds me of the fact that around downward turning points, GDP (like many other variables) tends to be revised downward. As a reminder, recall what GDP looked like going into the last recession (from this post on the last recession), and what the 2003 vintage of GDP looked like after the fact. (Also note that forecasters were predicting an acceleration of GDP growth back then, too.)
Figure 2: Log real GDP (1/31/01 release), SPF forecast (2/10/01), and log real GDP (11/25/03 release). NBER recession dates in gray. Sources: BEA via St. Louis Fed ALFRED, Philadelphia Fed and NBER.
A second observation is that the net exports to GDP ratio looks noticeably worse as a function of this revision, even from the perspective of several years, which is pretty amazing to me. This occurs because the trade deficit is revised substantially upward as GDP (in the denominator) is revised downward. Figure 3 shows both the total net exports and net exports ex oil imports ratio, using the advance and preliminary series.
Figure 3: Net exports to GDP ratio, 07Q1 advance (red), preliminary (blue); net exports ex oil imports to GDP ratio, 07Q1 advance (black), preliminary (green). Source: BEA, NIPA, and author’s calculations.
Finally, the preliminary series confirm what I, and Brad Setser, have discussed on several occasions (, ): namely that the export surge, upon which optimists pin their hopes, is looking a lot less impressive after the revision. Figure 4 shows q/q growth rates of exports and imports.
Figure 4: Growth rates of real exports of goods and services (in log terms, q/q), 07Q1 advance (red), preliminary (blue); imports of goods ex oil, 07Q1 advance (black), preliminary (green). Source: BEA, NIPA, and author’s calculations.
Quarter on quarter growth (in log terms) in real non-oil goods imports is now below that for goods and services exports. While over a 2 quarter horizon, it’s about 2.5 percentage points faster, Given that US imports are about 60% larger than exports, well, you can do the math.