Unexpectedly Intriguing!
31 July 2015

Do you remember when President Obama said that the U.S. economy, "by every metric, is better" than when he took office?

In addition to that claim having been rated as "mostly false" by the left-leaning Politifact, the Bureau of Economic Analysis rained on the Obama-Stewart talking points parade by, once again, revising their estimate of the nation's GDP growth downward. This time, for every quarter since the second quarter of 2012.

But then, last year, they revised every quarter since the second quarter of 2011 downward too. Let's take an animated look at the U.S.' incredibly shrinking GDP for both those annual revisions.

Animation: 2014 and 2015 GDP Revisions, 2009-Q1 through 2015-Q1

In the chart above, the vertical lines correspond to the first quarter of each year indicated.

Examining the chart, it's rather amazing how bad 2012 looks now, especially in the third and fourth quarters, as the U.S. economy verged on entering into recession where only the Fed's third round of Quantitative Easing (QE) policies kept the nation's then-faltering economy from sinking into outright contraction at the time.

Meanwhile, it's pretty surprising at how large the new downward revisions are for 2013, especially in the first and second quarters of the year, which corresponds with the first six months during which President Obama's Social Security payroll tax hike and other income tax hikes took effect. If not for the Fed's significant increase of its QE program in December 2012, which was made after long anticipation of those tax hikes, we think that these quarters would also have been ones of contraction.

Speaking of which, we'll soon revise our estimate of the GDP multipler for QE where, based on these revised GDP figures, we would anticipate also revising our previous estimate downward to be less than 1.0.

Data Source

U.S. Bureau of Economic Analysis. National Income and Product Accounts Tables. Table 1.1.6. Real Gross Domestic Product, Chained Dollars [Billions of chained (2009) dollars] Seasonally adjusted at annual rates. Last Revised on: July 30, 2015. [Online Database]. Accessed 30 July 2015.


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