Frequently Asked Questions

Guidelines for Citing BEA Information | ID: 123 | Created: Jan-13-2006
Answer

Why and how are seasonal adjustments made?

Seasonal adjustments remove recurring seasonal variations (variations that occur in the same month or quarter each year) from economic series so that the remaining movements in the series better reflect cyclical patterns in economic activity. For example, consumer spending for jewelry always declines in January, after the Christmas buying season ends. Thus, the strength in spending for jewelry for any given January is not determined by whether it increases or decreases -- it always decreases -- but by whether it decreases more or less than “normal decrease.” In simple terms, if spending for jewelry decreases at the “normal” rate, the seasonally adjusted spending series would indicate spending increased at the trend rate. If spending for a January decreases at a rate less than “normal,” seasonally adjusted spending would show a growth rate above the trend rate, and if spending for a January decreases more than “normal,” the seasonally adjusted change in spending would either be a decrease or an increase below the normal trend rate.

Other examples of economic series affected by seasonal patterns include: Consumer spending for clothing and consumer electronics, which decreases each January after the Christmas season ends; automobile production, which drops in July, as factories retool for new models; heating oil production, which increases during September, as producers anticipate the winter heating season; and home construction, which increases in March, as weather conditions improve.


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