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Will the GDP revisions help or hurt Obama?

  • July 29, 2013
  • Michael Mandel

The GDP revisions which come out on Wednesday are likely to reshape our perception of the Great Recession. The BEA will have new data available, notably on corporate profits. Moreover, the BEA  is adding in R&D and other intangible investments into GDP for the first time.

The BEA is a completely professional and nonpolitical organization, doing their best to improve statistics with a limited budget.  Nevertheless,  my best guess is that these changes will have several politically significant consequences. I could be very wrong, but I expect that: (added)

1. The savings rate will be revised up, something for President Obama to boost about.

2. The fall into recession in 2008 and 2009 will look steeper, as companies cut scientists and engineers.  The President and his economists will highlight this drop as a sign that the situation was worse than it seemed when he took office.

3. The recovery will look weaker, as domestic business R&D has apparently languished. Not good news for the President.

4. Productivity gains will be slower.

Added: Let me reiterate: All of the statistical agencies, including the BEA, are devoted to producing the best possible statistics on a limited budget, with no politics involved. Nevertheless, whenever big revisions change our view of the economy, these will have political consequences.

Further addition: When the budget for statistics are cut, policy suffers. (See for example https://directorsblog.blogs.census.gov/2013/06/19/census-bureau-budget-update-2/).

 

 

 

 

 

 

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