Unexpectedly Intriguing!
July 2, 2013

Nearly three months ago, just after the BEA released its third estimate of GDP for the fourth quarter of 2012, we gave the following odds in forecasting where GDP in the first quarter of 2013 would be recorded:

Using our modified-limo forecasting method, we would anticipate that real GDP in 2013-Q1 has the following odds of falling in the indicated ranges (all values are given in terms of constant 2005 U.S. dollars):

  • A 68% likelihood of falling between $13,581.8 billion and $13,867.2 billion.
  • A 95% likelihood of falling between $13,439.1 billion and $14,009.9 billion.
  • A 99% likelihood of falling between $13,296.4 billion and $14,152.5 billion.

The midpoint of our target ranges is $13,724.5 billion. We note for reference that this would correspond to an annualized real growth rate of 1.7%. [We forecast GDP - not GDP growth rates, which are very susceptible to big swings with just small changes in actual GDP.]

We did one other thing as well in our forecast - we took the over, which means that we expected that GDP would be recorded to be above our midpoint value of $13,724.5 billion.

So how did we do?

Would you believe that we just about completely nailed it?

The BEA reports that real GDP in 2013-Q1 came in at $13,725.7 billion, just 0.01% above the midpoint of our forecast range!

Not too shabby, especially because all we did was assume that GDP would grow at the same rate it averaged over the two preceding quarters!

Speaking of which, in now looking forward to where GDP will be recorded in 2013-Q2, well, we'll present our visual results, but we're not going to discuss them in detail, because they'll all be different by the time the data is actually reported!

Real GDP vs Climbing Limo Forecast vs Modified Limo Forecast, 2004Q1-2013Q1

The reason why is because the BEA is on the verge of a major revision for current and historic data, which will be released on 31 July 2013. That revision will re-base all the seasonally-and-inflation-adjusted values of real GDP to be in terms of constant 2009 U.S. dollars, instead of the 2005 U.S. dollars that the BEA has been reporting over the last several years. (Our chart above shows the data in terms of constant 2005 U.S. dollars).

So we're going to hold off on officially forecasting where real GDP in 2013-Q2 will end up until we have the BEA's revised numbers. Because we'll have enough work later dealing with all the changes that will be part of the BEA's upcoming data revision!

Labels: ,

About Political Calculations



blog advertising
is good for you

Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:

ironman at politicalcalculations.com

Thanks in advance!

Recent Posts

Applications

This year, we'll be experimenting with a number of apps to bring more of a current events focus to Political Calculations - we're test driving the app(s) below!

Most Popular Posts
Quick Index

Site Data

This site is primarily powered by:

This page is powered by Blogger. Isn't yours?

Visitors since December 6, 2004:

CSS Validation

Valid CSS!

RSS Site Feed

AddThis Feed Button

JavaScript

The tools on this site are built using JavaScript. If you would like to learn more, one of the best free resources on the web is available at W3Schools.com.

Other Cool Resources

Blog Roll

Market Links
Charities We Support
Recommended Reading
Recommended Viewing
Recently Shopped

Seeking Alpha Certified

Archives
Legal Disclaimer

Materials on this website are published by Political Calculations to provide visitors with free information and insights regarding the incentives created by the laws and policies described. However, this website is not designed for the purpose of providing legal, medical or financial advice to individuals. Visitors should not rely upon information on this website as a substitute for personal legal, medical or financial advice. While we make every effort to provide accurate website information, laws can change and inaccuracies happen despite our best efforts. If you have an individual problem, you should seek advice from a licensed professional in your state, i.e., by a competent authority with specialized knowledge who can apply it to the particular circumstances of your case.