The U.S. Bureau of Economic Analysis is on track to soon implement the third phase of a three-pronged plan to mitigate any potential for residual seasonality in gross domestic product. That’s when seasonal patterns remain in the data even after they are adjusted for seasonal variations.
BEA laid out the plan in 2016, after conducting a painstaking component-by-component review of some 2,000 nominal data series included in GDP to look for possible sources of residual seasonality.
A significant factor that BEA’s review found occurred when seasonally adjusted monthly data were aggregated to quarterly values. Over the last several years, BEA has made great strides working closely with the Census Bureau and others that supply data for GDP to implement strategies for removing residual seasonality in source data. That collaborative work has been crucial because the vast majority of data feeding into GDP come to BEA already seasonally adjusted by the supplier of those data.
In late July, BEA will roll out additional improvements, implementing the third phase of its plan. Key items include:
- Applying seasonal adjustment improvements to the entire GDP times series. (Annual figures stretch back to 1929 and quarterly figures back to 1947).
- Publicly releasing estimates for GDP (and gross domestic income) that are not seasonally adjusted, including major components, for the years 2002 and forward. These not seasonally adjusted numbers will come out at the same time as BEA’s seasonally adjusted GDP statistics. This will give data users a new tool for evaluating the economy’s growth and will further enhance data transparency.
- Expanding the number of years of data that are updated each summer. These annual updates have traditionally carried back a minimum of three years; now the update period will go back a minimum of five years. That should aid seasonal adjustment improvements going forward.
These improvements will debut on July 27, when BEA releases updated figures for GDP and its major components. The updated numbers will reflect the incorporation of data not previously available and methodological enhancements. BEA does such an update each year. This year, though, BEA is conducting a “comprehensive” update, meaning the entire GDP time series is opened for the update. This typically happens every five years.