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New York - First-quarter US growth rates from 2013 through 2015 are less anaemic, while subsequent rebounds are less hearty, revised data show.
The economy grew 1.2% at an annualised rate on average from January through March during the three-year period, up from a prior estimate of 0.5%, according to the Commerce Department’s annual update of gross domestic product. For the second quarter, average growth was cut to 2.5% from 3.2%.
The new readings represent more complete information on the components of GDP plus efforts to correct for so-called residual seasonality, or the effects that linger even after adjusting the figures for recurring fluctuations. Persistent first-quarter weakness in recent years had sparked a debate about these statistical quirks, prompting government agencies to revamp the process of smoothing discrepancies.
“We’ve made great progress on refining our seasonal-adjustment process,” Brian Moyer, director at the Commerce Department’s Bureau of Economic Analysis, told reporters in Washington this week.
The upward revisions to first-quarter growth rates were centered in 2013, which was boosted to 2.8% from 1.9%, and 2015, which now shows a 2% increase rather than 0.6%. Conversely, GDP in the first three months of 2014, which was probably partly depressed by severe winter weather that year, shrank 1.2% instead of the previously reported 0.9% decline.
Second-quarter growth rates for all three years were revised down.
Second-half revisions
GDP rates for the remainder of the three-year period saw more modest updates. Average growth in third quarters was marked up to 3.4% from 3.1%, while the fourth-quarter average was little changed at 2.4%.
Even with the tweaks, growth at the start of the each year remains weaker than in other quarters on average, suggesting some residual seasonality may remain. The BEA plans to fully incorporate fixes to the adjustment process by 2018.
The BEA was unable to say definitively whether the general improvement in first quarters was caused by the changes to the seasonal adjustment or reflected better source data that feed into the GDP calculations, Brent Moulton, associate director for national economic accounts at BEA, said at the press conference.
“It’s difficult to separate,” he said. For the entire period dating back to 2013, “these revisions are relatively modest.”
Annual revisions
The movement within years belies little change overall. The average growth for the total three-year period was revised to 2.2% from 2.1%, Thursday’s report showed.
One cautionary note is that the new breakdown shows a more pronounced slowdown in the economy heading into 2016. The year-over-year growth rate cooled from 3.3% in last year’s first quarter to 1.9% in the final three months of 2015, rather than the previous downshift from 2.9% to 2%.
The pattern of upward revisions to first-quarter data was broken this year, with the growth rate in the first three months of 2016 revised down to 0.8% from a prior estimate of 1.1%, Thursday report also showed.
The advance reading for second-quarter GDP came in at a 1.2% rate, well short of the 2.5% median forecast of economists surveyed. That left the year-over-year growth rate at
1.2%, the weakest in almost three years.
Weak trajectory
That trajectory has implications for Federal Reserve policy makers, who left interest rates unchanged this week and are watching the economic data to determine what’s an appropriate time to raise them. After the annual revisions, they’re faced with an expansion that was steadily losing steam in 2015, and the cooling continued into this year.
There were spots of good news in the update. Gross domestic income, a measure that combines all forms of earnings in the economy, grew at a revised 2.3% annual rate from 2013 to 2015, up from 2.1% in the previous data. That included higher corporate profits as well as household earnings.
For the first quarter, however, that reading was slashed to show a 0.9% gain from a previously estimated 2%. The main source of the revision was a downward adjustment to wages and salaries.
The saving rate at the end of 2015 was revised up to 6% from a prior estimate of 5.2%.
