It’s time for BEA’s annual update of gross domestic product and related statistics. That means when we publish second quarter GDP numbers July 30, we’ll also update GDP estimates for the first quarter of 2020 and the previous five years.
Each summer, the Bureau of Economic Analysis uses newly available data and methodological improvements to refine its earlier estimates of GDP, the most comprehensive measure of U.S. economic activity and trends. This year’s update will cover quarterly and annual estimates for 2015 through the first quarter of 2020, with selected updates of income and saving reaching back further.
The annual update will be released with the first estimate (known as the advance estimate) of second quarter GDP at 8:30 a.m. July 30.
The earlier statistics are updated to incorporate more complete and more detailed data than were previously available from the Census Bureau, the federal budget, the IRS, the Agricultural Department, and other sources.
This year’s update will also reflect ongoing work to harmonize BEA’s National Income and Product Accounts, including GDP, with its industry statistics. For example, we have better aligned the methodologies used to measure investment in structures with those used to measure the construction industry’s gross output and value added. This will improve the accuracy of both national and industry measures. (This year’s annual update of the industry economic accounts is coming Sept. 30, a month earlier than in past years.)
The July update will incorporate other improvements, including:
- The results of the annual update of BEA’s international transactions accounts in June.
- Updates to seasonal factors. BEA updates quarterly and monthly seasonal factors each year to capture changes in seasonal patterns that emerge over time.
- Other improvements in methodology and presentation. For example, we’re adding new subcategories of private fixed investment in intellectual property products to show research and development expenditures related to software publishers; to financial and real estate services; and to computer systems design and related services.
The reference year for index numbers and chained-dollar estimates will remain 2012. See “Preview of the 2020 NIPA Annual Update” in the May issue of the Survey of Current Business for more details.
Why does BEA go back and update its previous estimates? To produce the most accurate statistics, while allowing data users to compare economic trends across the years.
Each vintage of quarterly or annual GDP is based on the information available at the time it was produced. The advance estimate of any given quarter’s GDP is akin to a snapshot. More complete source data that can sharpen the picture arrive weeks, months, and even years later. That’s why BEA follows a schedule of updates to continue improving our statistics.
In addition to annual updates, we perform comprehensive updates about every five years – the most recent was in July 2018. Comprehensive updates incorporate data from the Census Bureau’s once-every five-years economic census.
Here’s a quick guide to the cycle of each quarter’s GDP, from the first estimate through the comprehensive update:
ADVANCE:
- About a month after a quarter ends
- A closely watched first look at the general economic picture
SECOND:
- About two months after the quarter ends.
- Reflects more complete source data
THIRD:
- About three months after the quarter ends
- More data means less reliance on projections
ANNUAL:
- Every summer
- Includes a substantial influx of comprehensive data, such as annual surveys or tax data
- Also may reflect improvements in methodology
- Updates annual and quarterly estimates for the previous five years (and sometimes more)
- Updates the first quarter of the current year, too
COMPREHENSIVE:
- Typically once every five years
- Includes the most comprehensive available data, including from the economic census
- Captures changes in the production environment in the U.S. economy
- Incorporates changes in how the economy is measured
- Reflects changes in international statistical standards
- Recalculates annual statistics dating back to 1929
- Recalculates quarterly statistics back to 1947