United States: GDP revised downward for all first quarters of 2020 to 2022


by Lucia Mutikani

WASHINGTON (Reuters) – U.S. economic activity was either even weaker or weaker than previously estimated in the first quarters of 2020, 2021 and 2022, driven mainly by downward revisions to consumer spending, show official data updated and published on Thursday.

The Bureau of Economic Analysis (BEA), the government agency that produces the gross domestic product (GDP) report, however, said there was no evidence that residual seasonality, which affected the GDP data several years ago, which is a problem.

The U.S. government adjusts economic data to remove fluctuations such as seasonal weather and holidays that normally occur on about the same date and with the same magnitude each year, to make the series easier to interpret and to analyze.

However, seasonal effects persisted in some cases, even after seasonal adjustment of the data. This happened most often in the first quarter GDP data, before the government fixed the problem in 2018.

At the time, residual seasonality tended to underestimate economic growth in the first quarter.

“We put forward a whole set of protocols and mechanisms, which we were going to check to make sure we didn’t have any residual seasonality,” Dave Wasshausen, associate director of national economic accounts at the BEA, told reporters.

“So we continue to do all these tests and checks to make sure that there is no residual seasonality, and there is not. We haven’t seen anything in particular that has made us think of any persistent components revised upwards or downwards.”

REVISED CONSUMER EXPENDITURES

GDP for the first quarter of 2020 has been revised downward, now showing a contraction at an annualized rate of 5.3%, instead of the previously reported rate of 4.6%. GDP for the whole of 2020 contracted by 2.2%, despite the good results recorded in the third and fourth quarters.

In the first quarter of 2021, GDP grew by 5.2% instead of 6.3% as previously indicated, consumer spending having been revised downwards. Growth for the whole year was reduced from 5.9% to 5.8%, due to the downward revision of the expenditures of the various states and local authorities, the expenditures of the federal administration and fixed investments in the non-residential sector.

In 2022, GDP contracted by 2.0% in the first quarter, compared to a previously reported contraction of 1.6%. Consumer spending, now estimated to be stable instead of growth of 1.3% as previously announced, is at the origin of this downward revision.

For the year as a whole, economic growth was reduced by 0.2 percentage points, to 1.9%, due to downward revisions in consumer spending, inventory investment, government spending local and federal and exports, as well as an upward revision of imports.

The annual revisions of the reference point incorporated the results of the 2017 economic census. The reference year moved from 2012 to 2017. The economic situation has barely changed between 2017 and 2022, with GDP growing at an average annual rate of 2.2%, compared to 2.1%, according to previous estimates.

GAP BETWEEN GDP AND RIB

The recession linked to the COVID-19 pandemic remained the deepest on record, with the economy contracting at an average rate of 17.5% between the fourth quarter of 2019 and the second quarter of 2020, a figure revised upwards by 0.7 percentage points. The ensuing recovery was the second fastest in history.

Regarding income, the economy grew at an average rate of 2.3% between 2017 and 2022. Gross domestic income (GDI) was 0.2 percentage points higher than previous estimates.

Some economists have pointed out that the gap between the quarterly GDP and GDI rates suggests that the economy is not as strong as recent data indicates.

Even if this gap was larger in the fourth quarter of 2022, it narrowed for the whole year, standing at -0.2% of GDP instead of the -0.6% previously announced. This gap, revised from 0.6%, was less than 0.1% compared to GDP in 2022.

“It should be noted that the average statistical gap as a percentage of GDP over the last 50 years is about 0.9%,” said Dave Wasshausen.

“And with the updated figures from 2017, the share is 0.3% or less for each of these three years. With this update, we are therefore very satisfied with the situation of this statistical gap,” a- he added.

Inflation was a little higher than expected in 2022, the year from which the Federal Reserve began to raise its interest rates. The price index for personal consumption expenditures, excluding food and energy, rose 5.2% last year, compared to an initial estimate of 5.0%.

The core PCE price index has been revised upwards for the first, third and fourth quarters of 2022.

(Report by Lucia Mutikani, French version by Claude Chendjou, edited by Kate Entringer)

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