In January 30, 2009, the BEA provided the advance estimate for fourth quarter real GDP growth of -3.8. This was revised on February 27 to -6.2% and finally revised in March to -6.3%.  So the advance figure for real GDP growth for first quarter to be released this morning should be viewed with skepticism. This is especially true given the strong tendency of the government to manage expectations through intentional slow release of the truth.  Consensus estimates for real GDP growth are around -5.1 or -5.2%.  Although the revised figure will likely be greater than the consensus estimate, -5.3% level or worse, we would not be surprised if the BEA announces an “expectations managing” advance figure in the neighborhood of the last advance number: -3.8 or so.

Silly stock market, advance releases are for kids… If you are skeptical that GDP figures are manipulated, check out John Williams‘ 2004 piece here:

A Tempting Target for Manipulation

In the introduction to this series on government reporting, I mentioned political manipulation of the GNP/GDP in the Johnson and first Bush administrations that went beyond overly positive methodological changes. In both instances, my sources were consulting clients who had been involved directly in the process. In the latter instance, an individual at the BEA also confirmed the situation.

Few people argue with the GNP/GDP reports, so when Lyndon Johnson kept sending the initial GNP estimates back to the Commerce Department for correction, he eventually got what he wanted, and the media dutifully reported stronger than actual economic growth.

Near the end of the first Bush administration, an outside-the-system manipulation was worked. A senior member of the Executive Branch approached a senior officer of a large computer company and requested that reporting of computer sales to the BEA be inflated. This was done specifically to help with the reelection effort. The request was granted, and thanks to the heavy leverage of computer deflation, reported GDP growth enjoyed an artificial spike.

There are suggestions of other direct manipulations over time, specifically involving the Clinton administration and the current Bush administration. Most recently, a bizarre annual revision to the GDP data eliminated the 2001 recession, at least as traditionally defined with two consecutive quarters of real GDP contractions.