Concurrent with the good news from the stock markets in July that we've been talking about lately, there was a report released last Friday by the Bureau of Economic Analysis that provided us with more reason for optimism: GDP, which had been contracting at an annual rate of about 6 percent each of the past few quarters, shrunk by only 1 percent in the second quarter of 2009, from April through June.
At the same time, though, the BEA revised its estimate of GDP from the first quarter of 2009. While it had been previously reported that the economy shrink by 5.5 percent, now the BEA thinks it was more like 6.4 percent. The BEA also thinks that the economy contracted by 1.8 percent rather than the earlier report of 0.9 percent in 2008.
In a sense, this doesn't matter: The economy was what it was, and stock prices have already fallen, businesses have already failed, jobs have already been lost. Changing the big numbers doesn't change any of that. It does mean that the contraction was somewhat more severe than expected, meaning that this quarter's puny 1 percent presents a significant contrast to recent quarters.
But it's also worth remembering that not only are these economic numbers always presented in hindsight, they're also always subject to revision. Three months from now, there's always the possibility that we'll discover this past quarter wasn't as good - or as bad - as we think now.
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