Recession: Twice As Bad As We Thought, According To Government Revisions

It's sort of a good news / bad news scenario.

Today, U.S. GDP numbers revealed that the economy shrank only 1 percent last quarter, a much better result than many analysts expected. The bad news? The recession has been TWICE as severe as we thought. Yes, you read that correctly.

The government issued major revisions to the way it tracks the economy today, a change which had an enormous effect on the metrics that track the downturn. Here's how Bloomberg put it: "The world's largest economy contracted 1.9 percent from the fourth quarter of 2007 to the last three months of 2008, compared with the 0.8 percent drop previously on the books."

So what accounts for government figures being so severely off? At the New York Times, Floyd Norris writes that what were' seeing is "the granddaddy of revisions." Thanks to newly available - and vastly improved - data, the Bureau of Economic Analysis revised growth statistics back to 1998. The data changes, which usually occur about every five years, are incredibly wonky. But many of them involve the arcana of personal consumption statistics and how the government accounts for personal health care expenditures.

More from Bloomberg:

"The updated statistics also showed that Americans earned more over the last 10 years and socked away a larger share of that cash in savings. The report signals the process of repairing tattered balance sheets following the biggest drop in household wealth on record may be further along than anticipated. "

Some signs of hope, but not exactly reassuring news.

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Comments

[Annirich]

If you do your research, this whole economic debaucle began in the 90s with Clinton who insisted that all minorities should have a home w/mortgage ie Freddie Mac and Fannie Mae in turn ACORN. Millions and millions of dollars were filtered through those organizations (Obama organizer) and the banks were forced to lend. There was an article in the NYT in 1997 discussing the "new industry" of sub-prime mortgages and yes, it would work in good economic times; not so good in bad and 'could' cause an economic meltdown. Then in 2001 Bush warned the Congress that more money to FMFM would be bad; they were too over loaded with the sub-primes. Greenspan echoed his words later but didn't force a halt. Well you can see where it led to-NOW. So that was the catalyst to what we have now and yet, we still have ACORN (totally corrupt) and we're still funneling money, and gobs of it to FMFM. Is that smart from the White House? NOT.

[StillweRise]

JUST A PIECE OF GOOD NEWS ON THE ECONOMY TODAY...

Dow ends best July in 20 years
Stocks are mixed Friday after the second-quarter GDP report. Dow gains nearly 9% in the month.

[desertman]

April 16, 1930

[flamenfiddle]

political midterm shuffling if you ask me.
If it was really twice as bad than the "rescue" was twice as effective?
Nonsense.
It's only just begun and you can bet any "improvements" are fixed. Pay attention to these false gains as they are there simply financial shenanigans to line the pockets of the Goldmans of the world before more terrible times set in.

[Norak]

Flamenfiddle, you could be right. Feels like a dead cat bounce.

[Indra]

I don' know. I have never been wealthy so I do not feel that I have lost anything. If you don't have a job you can't lose one. If you don't have money you can't lose it. If you never had respect from people because you didn't have anything you can't lose respect. I'd say things are about average for me, and that's a better place than what others are going through. Welcome to the club. You'll learn.

[gerald4]

The US government is living like some American families that charge all of their expenses to credit cards, buy new autos, take expensive vacations, buy new designer clothes, eat out at expensive restruants, rent instead of buying a house, pay the minimum credit card payments every month, and quit working at their jobs. Why should anyone work if they can live off of borrowed money. This is the new American Way.
Maybe my wife & I could get a divorce with her awarded all of our assets, and then we could travel around the world living the high life with my credit cards until the cards were "maxed out", and then I could file bankruptsy and not pay for our good times. We could then get re-married, but she might want a newer, better looking and younger man instead of me.
At least we have clean air to breathe since we closed down out factories and fired those people polluting the earth as they made the things that we consume. Let us pay the foreigners with title to our US located Farms, Casinos, Agri-Businesses, Forrests, Hotels, Office Buildings, etc. to pollute their environment as they make the things that we consume.

[tailgateshirts]

its ok, it was the same place that has hated every policy of Obama's. But yet to give any credit when things look better

[audadvnc]

My facility is down 50% in business compared to last year, with others in my company averaging about 20% down. I'm going on vacation next week to get off the payroll books. Where's that Appalachian Trail pamphlet, Maria?

[rbenjamin]

As Tonto said to the Lone Ranger, "What do you mean by we"?

[RSII]

The government can do anything with numbers. And "Americans" earned more over the last ten years and socked away a larger share"? That seems hardly credible.

[bramapanzer]

Right, that is just a flat out lie. The reason we got into this crises was unsustainable credit, now they are saying that we actually saved more during the 2000's than the 90's? Talk about revisionist history...

[mjc]

This administration has been seeing "green shoots", the beginning of the end of a recession, a chicken in every pot since the day they took control. There is this great fear that this recesson/depression is THEIR economic crisis. In spite of all the talk about transparency in the policies of the Obama administration and honesty between them and the American people, there has been little of either.

[Dragash]

Hey, Bloomie...I thought recession was great news for your real-estate buddy-buddies?