4 Takeaways From a Long-Term G.D.P. Revision


Over all, growth averaged 2.1 percent in the first quarter from 2012 to 2017, up from 1.6 percent. For the third quarter, it averaged 2.4 percent, down from 2.7 percent. That may not perfectly smooth out the seasonal bumps, but it’s close.

Americans are saving more than we knew

Possibly the most dramatic shift in the revisions came in the bureau’s measure of the personal savings rate, which is how much Americans set aside as a share of their income each year. Last year, that rate looked really low: 3.4 percent, a level that economists warned could mean consumer spending could fall off, dampening growth.

Well, surprise! It was a mistake, apparently. The bureau made use of a new Internal Revenue Service analysis and concluded that the government had been overestimating the amount of national income held by corporations and underestimating how much of it was held by proprietors of businesses. That meant people — as opposed to corporations — had been sitting on more money than the government previously thought. And that meant the savings rate was higher.

The revised rate for 2017 nearly doubled, to 6.7 percent. So Americans aren’t spending as unwisely as previously thought, although other statistics provide a sobering reminder of how unprepared many people are for an economic shock: In 2016, 44 percent of American households said they would not be able to easily handle a hypothetical emergency expense of $400, according to the Federal Reserve.

Your cellphone made the trade deficit worse than we thought

Americans buy a lot of phones that are made in other countries. And those phones keep getting better — a phone you can buy for $100 today is capable of much more (for good or ill) than the phone you bought for the same price in 2013. That means it’s more valuable.

Using a new tool from the Fed, the government is now better able to estimate the value of that improvement — and see how much it underestimated it in the past.

And it turns out they underestimated by a lot. The revisions make clear that the phones Americans were importing were more valuable phones, in inflation-adjusted terms, that previously thought. Because that pushes up the real value of imports, it adds to the trade deficit, which has been in the news a bit lately.


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