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Anyone hear anything from Washington DC today about who to give credit for this? I know who would take credit for this had the report looked better.....
There was a big negative Q1 several years ago. The talk at the time was that the government's seasonal adjustment is flawed. They changed the seasonal adjustment methodology in recent years before the particularly weak report to an approach called concurrent seasonal adjustment.
There was a big negative Q1 several years ago. The talk at the time was that the government's seasonal adjustment is flawed.
Actually, the talk at the time (2014) was over how severe Q1 weather had been over much of the nation...
"The bad weather in much of the U.S. in early 2014 was a significant drag on the economy, disrupting production, construction, and shipments, and deterring home and auto sales," wrote PNC Senior Economist Gus Faucher in a note out prior to the release. "But data show growth rebounding in the second quarter, with improvements in home and auto sales and residential construction."
In an interview following the release Stephen Auth, Chief Investment Officer at Federated Investors, called the revision "pretty incredible" but says that underlying trends have shown improvement that has simply been "masked" by the weather. He expects second quarter GDP growth to come in north of 4% and continual market gains.
Quote:
Originally Posted by lchoro
They changed the seasonal adjustment methodology in recent years before the particularly weak report to an approach called concurrent seasonal adjustment.
Can you elaborate? As documented on BEA's website, the agency has been examining GDP componentry for residual seasonality as part of a project begun in 2015.
Bad weather is blamed all the time for a weak Q1 GDP despite being adjusted for seasonality.
There was also the 100 percent bonus depreciation rule which expired at the end of the previous year and may have pulled expenditures forward. In recent years, it has been scaled back to 50 percent and is renewed through action by Congress. Hence, the uncertainty over its future status may be having an effect on the rush to get the deduction in by the end of the year.
It means that the seasonal adjustments are subject to constant revision in the time series. It's now commonly used in the US and other countries.
The problem with seasonal adjustments for Q1 has been noted for some time, well before 2014.
Bad weather is blamed all the time for a weak Q1 GDP despite being adjusted for seasonality.
Not by serious people. Those do however realize that -- as in 2014 -- actual weather conditions can have more severe effects than what historically-derived adjustment factors will account for.
Quote:
Originally Posted by lchoro
There was also the 100 percent bonus depreciation rule which expired at the end of the previous year and may have pulled expenditures forward. In recent years, it has been scaled back to 50 percent and is renewed through action by Congress. Hence, the uncertainty over its future status may be having an effect on the rush to get the deduction in by the end of the year.
Off-topic. An example of fleeing into a desperate diversion.
Quote:
Originally Posted by lchoro
It means that the seasonal adjustments are subject to constant revision in the time series. It's now commonly used in the US and other countries.
No one asked what it meant. You were asked if you could elaborate. I think we have our answer.
Quote:
Originally Posted by lchoro
The problem with seasonal adjustments for Q1 has been noted for some time, well before 2014.
Alphaville is a water-cooler gossip blog, and this particular piece dealt not with seasonality in GDP data, but in BLS's Current Population Survey. Is that the best you could do?
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IMO, we are near full employment. In my local area the unemployment rate is below 4%. Any more gains will be coming from employees with once marginal skill_sets, will be improving experience levels and acquiring new skills. Results should show beginning summer '17.
Not by serious people. Those do however realize that -- as in 2014 -- actual weather conditions can have more severe effects than what historically-derived adjustment factors will account for.
But you just blamed it on bad weather. Adjustment factors in Q1 should have incorporated much of that.
Quote:
Originally Posted by Pub-911
Off-topic. An example of fleeing into a desperate diversion.
Not off-topic at all. You didn't know why Q1 2014 had weak growth. I provided a perfectly reasonable explanation for the decrease in private investment that quarter.
Quote:
Originally Posted by Pub-911
No one asked what it meant. You were asked if you could elaborate. I think we have our answer.
One should know the implications for the time series from changing how the seasonal adjustment is calculated.
Quote:
Originally Posted by Pub-911
Alphaville is a water-cooler gossip blog, and this particular piece dealt not with seasonality in GDP data, but in BLS's Current Population Survey. Is that the best you could do?
It's not difficult to find that fact. Just because it may be repeated by another publication doesn't negate its validity. The Q1 weakness versus the other three quarters has been notable since 2000.
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