Frequently Asked Questions
Guidelines for Citing BEA Information | ID: 998 | Created: May-03-2011
The April 30, 2011, issue of The Economist contains an article, “Botox and beancounting,” that focuses on differences between the United States and Europe in terms of how economic statistics are measured and reported. The article asserts that these differences result in a “cosmetic” boost being given to the U.S. economy as measured by the gross domestic product (GDP) growth rate. Although there are some international differences in how economic data are reported, the article provides an incorrect and biased perspective on U.S. statistics such as the GDP estimates produced by BEA.
- BEA does not “cosmetically” boost the GDP estimates. BEA’s estimates are widely regarded as objective estimates that conform to best practices and international accounting standards. When the most frequently cited U.S. measures differ from those used by the European Union (EU), it is because the U.S. statistical agency believes that the measures are better suited for analyzing the U.S. economy. Indeed, as the article points out, many of the innovations in economic statistics that have originated in the United States have later been adopted in Europe and have become codified in international accounting standards.
- Stating quarterly growth at annual rates simply makes it possible to compare quarterly and annual growth rates on an apples-to-apples basis. In Europe, the press and analysts routinely convert and report EU quarterly growth at annual growth rates.
- According to numerous time-series studies, revisions to the U.S. GDP estimates are unbiased (that is, the mean revisions to GDP have not been statistically significant over the long-run time periods in the revision studies conducted by BEA and others). For example, over the period 1983–2009, GDP was revised up by an average of 0.2 percentage point. However, because of lags in the availability of more complete source data, early GDP estimates tend to understate declines in GDP during economic downturns; for example, downward revisions to GDP between 2007 and 2010 explain a significant share of the downward revisions reported in The Economist article.
- Consistent with recently adopted international guidelines, the United States does count military equipment as investment rather than as government consumption. However, even if BEA were following the older guideline that is still in use by the European countries, U.S. purchases of military equipment for the conflicts in Iraq and Afghanistan would still have been counted as part of GDP. By treating military equipment as investment rather than consumption, the level of U.S. GDP is slightly higher, reflecting the depreciation of past investments, but the difference between U.S. GDP growth and European GDP growth is negligible.
- The article suggests that U.S. measures of financial services are overstated because they include trading gains. However, the U.S. measures are not based on trading gains, and only reflect financial transactions—trading, intermediation, bookkeeping, insurance, and other services—provided by the banking, insurance, and financial industries.
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