Monday, May 4, 2009

More on My Confusion with the BEA Q1 GDP

The Chart below shows two measures of non-residential investment in structures: private construction spending from the Census Bureau (blue) and Gross Private Domestic Investment Expenditure in Non-Residential Structures from the National Accounts (red). The latter is part of the BEA's report last week that Q1 real GDP was 1.6 percent lower than it was in Q4.

As you can see from the chart, the BEA reports a sharp decline Q4-Q1 but the Census Bureau does not. Part of the difference is that the latest version of the Census Bureau numbers were not available until this morning. Thus, I expect the BEA to revise upward nonresidential structures investment expenditure. They may end up saying that real GDP fell 1.5 percent rather than 1.6 percent.

Another reason this is important is that nonresidential investment is good indicator of the health of capital markets, because residential investment would be low now even with healthy capital markets. Thus, I would really like to know whether non-residential structures investment was pretty flat, or fell sharply.

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