In two words? Not good. However, it is important to keep in mind that this mostly affects historical data. The shape of the recession and recovery haven’t really changed all that much, it is more the depth of the recession we just went through was deeper and more severe than previously estimated. No time this morning to elaborate as we have our Governor’s Council of Economic Advisors meeting here in a few minutes, however I wanted to post these few graphs that illustrate what the updated GDP figures did to the big picture.
First, the Real GDP revisions were negative. Previous estimates had the GDP contraction during the Great Recession at -4.1 percent, the largest/worst since the Great Depression, however with the new data, that estimate is now -5.1 percent.
The following table characterizes which categories of GDP were revised and in which direction – using the traffic signal color scheme.
Given how important consumer spending is to the overall economy, the downward revisions to PCE were large and the overall driver of the revisions.
Another downward revision that played an important role was the revision to State and Local government. With the public sector budgets now beginning to impact the economy in a larger, more negative manner, these revisions are a further drag on overall growth.