The BEA just announced revisions to GDP numbers along with their new, second quarterly number. There were major revisions with quarterly information from 2007 onward. Let’s pull up what the numbers looked like on May 26th, or what we thought they looked like on Thursday, to give a sense of the change. Here’s real GDP, quarterly with the blue line what we thought Thursday and the red line what we think as of Friday. Click on all charts to enlarge:
We can also look at quarterly changes:
We’ll talk more about what is going on underneath this graph in the future. But for now, it is worth noting that this is another data point that the recovery is sputtering. It may or may not end up as a technical double-dip recession, but this kind of faltering growth would be indistinguishable from one. One interesting thing about the update is that the recession was deeper in late 2008 and early 2009, pre-Obama-socialism, than previously estimated. I wonder what the ideal stimulus package looks like then knowing what we know here? Meanwhile, real GDP hasn’t hit the previous peak high yet, much less returned to trend. All in all, an awful end to a terrible week.
Recovery is a three-legged stool of a serious jobs and other fiscal stimulus programs, monetary policy in the form of QE3, and a program of bad debt writedowns and getting to the bottom of the foreclosure crisis. If any of those are missing or go the opposite way – like through an austerity package rushed through Congress or a conservative Fed tightening this Fall or a botched AG settlement – more pressure is put on the other legs.