Think back to the end of October when Jan Hatzius, Goldman Sachs economist and sometime clairvoyant, suddenly lowered his forecast for the third quarter US GDP from 3 per cent to 2.7 per cent.
The air was thick with conspiracy theories. After all, this was the same Goldman economist who proved to be remarkably prescient in predicting US nonfarm payrolls earlier that month, adjusting his forecast less than 24 hours day before the data were due.
In the event, at the first print, Hatzius’ caution looked misplaced. Q3 GDP was declared at 3.5 per cent. The conspiracy chatter died away…
Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 2.8 percent in the third quarter of 2009, (that is, from the second quarter to the third quarter), according to the “second” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP decreased 0.7 percent.
The GDP estimate released today is based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, the increase in real GDP was 3.5 percent…
Spooky.
Incidentally, on the publication of that unduly optimistic first GDP print, the Dow zoomed 200 points, or 2 per cent. How might stocks have responded to a figure of 2.8 per cent?
More to the point, why has the damage now been restricted to just 14 Dow points at pixel time?
Strange times.
Related links:
US GDP growth revised down to 2.8% – FT
The Goldman affair – and why they made money – FT Alphaville
The not-so-subtle management of markets – FT Alphaville