Q2 GDP: Better than I Thought

by: Casey Mulligan

My vacation schedule did not permit me to attempt a spending-based real GDP forecast for 2009 Q2, but I did offer one based on productivity: 1.0 percent less than 2009 Q1.

I had read that others were more optimistic with spending-based forecasts -- I might have been too I had attempted one.

Anyway, the BEA's advance estimate this morning was 0.3 percent lower than Q1.

What's important about this is that productivity rose a lot Q1 to Q2 (that's why my productivity approach -- which assumed that productivity would rise, but not so much -- delivered an underestimate). I have sounded this theme for a while now: employment is going down yet productivity is going up. Other's say "Okun's Law is broken." However you label this fact, it is telling us a lot about why we have this recession.