28 Apr 2016
US Q1 GDP: Not as bad as data suggests; scope for important revision- Rabobank
According to analysts from Rabobank today’s report of US Q1 GDP has the scope for an upward revision of almost 2.1 percentage points.
Key Quotes:
“Global headwinds continue to slow down the US economy with GDP growth falling to 0.5% in Q1 from 1.4% in 2015Q4.”
“However, the state of the US economy may not be as bad as today’s official growth figure for Q1 suggests. Even though the BEA makes a seasonal adjustment to the GDP data and has recently revised their procedures, there is still some substantial residual seasonality left.”
“If we correct for this residual seasonality with a second round of seasonal adjustments, we see that the growth rate jumps from just 0.54% to 2.61%. This implies that there is scope for an upward revision of almost 2.1 percentage points.”
“As long as the BEA has not solved the seasonality issue in the GDP figures, the FOMC participants are forced to sit on their hands in the first few months of the year, because it’s difficult to distinguish how much of the slowdown in Q1 GDP should be attributed to incorrect/incomplete seasonal adjustment or to a genuine deceleration in economic activity.”
Key Quotes:
“Global headwinds continue to slow down the US economy with GDP growth falling to 0.5% in Q1 from 1.4% in 2015Q4.”
“However, the state of the US economy may not be as bad as today’s official growth figure for Q1 suggests. Even though the BEA makes a seasonal adjustment to the GDP data and has recently revised their procedures, there is still some substantial residual seasonality left.”
“If we correct for this residual seasonality with a second round of seasonal adjustments, we see that the growth rate jumps from just 0.54% to 2.61%. This implies that there is scope for an upward revision of almost 2.1 percentage points.”
“As long as the BEA has not solved the seasonality issue in the GDP figures, the FOMC participants are forced to sit on their hands in the first few months of the year, because it’s difficult to distinguish how much of the slowdown in Q1 GDP should be attributed to incorrect/incomplete seasonal adjustment or to a genuine deceleration in economic activity.”