This additional information, including revisions in series used to estimate GDP, result in more accurate final GDP estimates than the earlier advance or preliminary estimates.
The BEA website provides a succinct answer to this important question:. Early vintages of the GDP estimates are based on partial and incomplete source data. Subsequent GDP estimates incorporate increasingly comprehensive and improved source data. Periodically, BEA conducts studies of reliability. In these studies, reliability is defined as whether the successive vintages of GDP estimates present a consistent, general picture of the economy.
The most recent reliability study found as have previous studies that the early estimates of GDP present a useful picture of economic activity. They consistently indicate whether growth is positive or negative, whether growth is accelerating or decelerating, whether growth is high or low relative to the trend, and where the economy is in relation to the business cycle.
In addition, the latest study found that the average revisions to GDP are small and positive, indicated a tendency toward upward revisions[. Providing three data releases for GDP gives users the best available data in a timely manner based on a flow basis, starting about one month after the end of a quarter. Approximately two months following the release of the advance estimate, the final GDP estimate is published. It has been revised to include additional information that makes the final data a more accurate indicator of GDP than the earlier advance or preliminary estimates.
Gross Domestic Product estimates of the output of the entire economy require the BEA to use information on many different sectors of the economy and from many different sources to estimate quarterly real inflation adjusted and nominal current dollars GDP, the GDP deflator price level data and national income statistics.
Some data that are used as inputs to calculate GDP are frequent and current—for example, interest rates are available daily and without a time lag. Other data may be available monthly with only a short lag of several weeks, such as payroll employment. Still other data might only be available less frequently, like manufacturing surveys, which often are only reported after a long lag.
Revised and benchmarked historical data are used to generate updated future and revised historical seasonal factors. Otherwise, a decline in the value of money could raise GDP without any extra economic production. Your Privacy Rights. To change or withdraw your consent choices for Investopedia.
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This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. Related Articles. Partner Links. Real gross domestic product real GDP is an inflation-adjusted measure of the value of all goods and services produced in an economy. Consumer Spending Definition Consumer spending is the amount of money spent on consumption goods in an economy.
The advance estimate , coming about a month after the quarter's end, is an early look based on the best information available at that time. The second estimate and third estimate each incorporate additional source data that weren't available the month before, improving accuracy.
The nation's gross domestic product totals trillions of dollars. Most often, the number you'll hear people refer to as "GDP" is a percentage. That's the rate of change in real GDP from the previous quarter or year. GDP data are seasonally adjusted to remove the effects of yearly patterns, such as winter weather, holidays, or factory production schedules. This ensures that the remaining movements in GDP better reflect true patterns in economic activity.
Quarterly GDP data are reported at annual rates , for ease of comparison, unless otherwise specified. BEA estimates the value of the goods and services produced in each state and the District of Columbia quarterly and annually.
The data include breakdowns of industries' contributions to each of these economies. GDP statistics for counties, metropolitan areas, and some other statistical areas are released annually. They include 34 industries' contributions to the local economies.
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