Surprising GDP

When the preliminary GDP numbers came out last month, I cautioned that we need to be careful in our analysis, as the final trade numbers had not yet come out. Well, today BEA released the revised Gross Domestic Product and Corporate Profits with a very large revision upwards -- from the advanced estimate of 1.9% to today's preliminary estimate of 3.3%. According to BEA, higher number "reflected upward revisions to exports and to private inventory investment and a downward revision to imports."

At least I got part of the issue right. The size and direction still surprise me, especially since the Fed's July 23, 2008 Beige Book (which covered June and the first two weeks of July) stated that, "Reports from the twelve Federal Reserve Districts suggest that the pace of economic activity slowed somewhat since the last report."

So I'm not sure we can take much solace from the new GDP numbers. They will, however, certainly spice up the political debate. At least for a week, since all eyes are more likely to be glued on the release of the latest Beige Book next Wednesday.