Wednesday, January 31, 2007

4th quarter US GDP 3.5%-utterly meaningless

From the BEA's release:

"The Bureau emphasized that the fourth-quarter "advance" estimates are based on source data that are incomplete or subject to further revision by the source agency (see the box on page 4). The fourth-quarter "preliminary" estimates, based on more comprehensive data, will be released on February 28, 2007."

We won't know the real number until the final data are released in several months.

Also from the BEA's release: "Quarterly estimates of GDP are released on the following schedule: "Advance" estimates, based on source data that are incomplete or subject to further revision by the source agency, are released near the end of the first month after the end of the quarter; as more detailed and more comprehensive data become available, "preliminary" and "final" estimates are released near the end of the second and third months, respectively. The "latest" estimates reflect the results of both annual and comprehensive revisions."

I suppose market activity based on the release of the advance estimate is due to either institutions reacting to their forecasts of the advance release and their analysis of historical revisions to the GDP number, or to people just reacting to the headline without taking a closer look at the data.

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