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Updated measures of revision for quarterly GNP estimates.

Updated Measures of Revision for Quarterly GNP Estimates

BEA has updated its measures of revision for the quarterly estimates of GNP. These measures are often analyzed in evaluations of GNP, and some of them have been included in GNP news releases since 1975 to help users gauge the likely size of revisions.

Table 1, which appeared in the April GNP news release (the release of the advance estimate for the first quarter of 1990), shows two measures - average revision without regard to sign and range of revisions - for current-and constant-dollar GNP.(1). The first two lines in both the current- and constant-dollar parts of the table show the revisions from the advance and preliminary estimates, respectively, to the final estimates. Advance estimates are released in the first month after the end of the quarter; preliminary and final estimates are released in the second and third months, respectively. Revisions from the advance and the preliminary estimates to the final estimate primarily reflect the incorporation of newly available and revised source data. The remaining three lines show the revisions from the advance, preliminary, and final estimates, respectively, to the latest estimates. The latest estimates are those released in the comprehensive (benchmark) revision in 1985 and in subsequent annual (July) revisions. Revisions in the latest estimates reflect, in addition to newly available and revised source data, the incorporation of revised seasonal adjustment factors, changes in estimating procedures, changes in definitions or classifications, and changes in the base year for calculating real GNP.

The measures in table 1 are based on the GNP estimates for 1976-87. The updating from measures based on the estimates for 1976-86 involved adding the four quarters of 1987 and incorporating the 1986 quarters published in the annual revision of July 1989 as the latest estimate. As a result of the updating, the ranges are slightly larger; the average revisions are virtually identical to those shown previously. This comparison suggests that the recent record of revisions did not differ significantly from the longer term record.

Table 1 shows that, for 1976-87, revisions without regard to sign between the quarterly percentage changes in the advance estimates of real GNP and in the final estimates have averaged 0.7 percentage point (expressed at an annual rate); between the preliminary and the final estimates, the revisions have averaged 0.4 percentage point. Annual and comprehensive revisions result in larger revisions. The revisions between the advance, preliminary, and final estimates and the latest estimates have averaged 1.8, 1.7, and 1.8 percentage points, respectively. Table 1 also shows that revisions between the preliminary and final estimates ranged from -0.3 to +0.6 percentage point for two-thirds of the quarters. For nine-tenths of the quarters, these revisions ranged from -0.8 to +0.9 percentage point. (A revision of 1.0 percentage point in the quarterly change in GNP reflects a revision of less than one-quarter of 1 percent in the level of GNP.) [Tabular Data Omitted]

Table 2 expands the presentation to the major expenditure components of GNP for two of the comparisons shown in table 1 - the advance to final estimates and the final to latest estimates. Because the change in business inventories and net exports components contain both positive and negative estimates, they cannot be presented in percentage terms; thus, the measures for these components are based on dollar changes. The components that have average revisions about the same as, or smaller than, GNP are personal consumption expenditures for services and State and local government purchases. The ranges for total GNP and for most components are skewed in the direction of upward revisions. The exceptions are Federal government purchases, personal consumption expenditures for services (advance to final estimates only), State and local government purchases (advance to final estimates only), and imports (final to latest estimates only).

(1.) Allan H. Young, in "Evaluation of the GNP Estimates," SURVEY OF CURRENT BUSINESS 67 (August 1987): 18-42, describes these and several other revision measures and discusses their usefulness in assessing the reliability of GNP estimates. The updated measures published since that article differ from those in the article in that the later measures are calculated directly from the GNP estimates as initially published. Earlier measures included adjustments to remove the effects of definitional and classificational changes and of updating the base year for calculating constant-dollar GNP. Because the effect of definitional and classificational changes on quarterly revisions in GNP was negligible and because removing the effect of updating the base year involved complex technical problems, these adjustments were eliminated.
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Title Annotation:gross national product
Publication:Survey of Current Business
Date:Apr 1, 1990
Words:757
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