Friday, February 27, 2009

Bad News That Isn’t “New”

The revised rate of real GDP growth for the 4th quarter of 2008 was released this morning.

This is the second of 3 releases of this number. Every quarter gets 3 announcements, coming 1, 2, and 3 months after it ends.

This revision to –6.2% is much worse than the first estimate of –3.8%. That’s bad. The –3.8% was the worst in 26 years, and the –6.2% is still the worst in 26 years (although it is a lot closer to the –6.4% we registered in 1982 I).

Keep in mind that the media likes to push this as new news. It is new, but not really that new. We tend to hear about these later revisions more when they change the estimate up or down substantially (like this time around). And, the news business being what it is, we hear more about this when the revision is downward.

For example, this news item was at the top right of the headlines on Drudge Report when I got up this morning, and it was listed in red instead of black. In other quarters, where there is less change, I sometimes forget about the announcement date (which I know by heart) because the news sites don’t put it up front like this.

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