Week of September 30, 2024

Dec Mullarkey, CFA , Managing Director, Investment Strategy and Asset Allocation

Perhaps no one needs reminding that the U.S. has had a roaring recovery from the pandemic. But last week the Bureau of Economic Analysis (BEA) updated its five-year lookback and concluded that GDP grew faster than previously reported.

Lookback revisions are normal. Most government economists strive to get critical data into the hands of policymakers and markets as soon as they can. This forces some level of estimation that gets replaced by sharper measures when available.

These new estimates show GDP grew faster from 2021 through to early 2023. While there were recession fears in the first half of 2022 as GDP turned negative, according to this new scoring that didn’t happen. In fact, second quarter 2022 GDP was revised from contraction to expansion.

All this is expected to lead to upward revisions in business output. This in turn suggests productivity is stronger than initially thought. U.S. Federal Reserve chairman Jerome Powell also liked the new view and said it helped reduce downside risk to the economy.?

Sources: Bloomberg, Financial Times, 2024.

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