Transcript An update on why GDP is revised - Office for National Statistics

Why is GDP revised?
Andrew Walton
Assistant Deputy Director
National Accounts Coordination Division
2 October 2013
Outline
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•
•
•
Revisions in general
How GDP is compiled
GDP revisions
Some numbers
• Levels
• Growths
• Nominal GDP revisions
• Conclusions
• What’s next?
Revisions to economic series
• Revisions are a fact of life for most
economic series
• Or else:
• The first estimate is delayed
• Later information is ignored even when
it tells a different story
• Balance between accuracy and
timeliness
How GDP is compiled (1)
• Three approaches
• Output, Expenditure and Income
• Perfect statistical world – all equal
• Many sources
• Monthly, Quarterly, Annual
• Various timings
• Monthly turnover (IoP around 6 weeks)
• Annual tax returns (15 months)
How GDP is compiled (2)
• Preliminary estimate (25 days)
• Accuracy and timeliness trade-off
• One of the fastest in the world
• Based exclusively on output, 44% data
• Second estimate (8 weeks)
• Growth based on output, 83% data
• Publish all 3 approaches
• Some provisional expenditure sources
• Limited direct income information
• Use of quarterly alignment adjustments
How GDP is compiled (3)
• Quarterly National Accounts
• 13 weeks
• Based on output, 92% data
• Similar to second estimate
• Expenditure components more firm
• Revisions to previous periods but not for
SU balanced years
• When 4 quarters are published
• Seasonally adjusted annual constrained
to equal unadjusted annual
How GDP is compiled (4)
• Balanced supply and use
• Framework for confronting differences
• Levels not growths
• 112 industries and products
• First balance after around 18 months
• BB13 balanced 2011
• Not all benchmarks always received
• Second balance is usually “final”
except for methodological changes
Why is GDP revised?
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Output source data revised
Expenditure and income
Revised seasonal factors
Annual chain-linking changes weights
Supply and use balancing
New methods
New international frameworks
Some numbers: Revisions to GDP levels
• Balancing supply and use fixes
annual level not quarterly growth
• Use quarterly path from output
anchored to SUT levels
• Generally small apart from methods
changes
2012 Q4
2012 Q1
2011 Q2
2010 Q3
2009 Q4
2009 Q1
2008 Q2
2007 Q3
2006 Q4
2006 Q1
2005 Q2
2004 Q3
2003 Q4
2003 Q1
2002 Q2
2001 Q3
2000 Q4
2000 Q1
1999 Q2
1998 Q3
1997 Q4
1997 Q1
1996 Q2
1995 Q3
1994 Q4
1994 Q1
1993 Q2
1992 Q3
1991 Q4
1991 Q1
CVM GDP at Basic Prices, as at BB 2003
400000
£ millions, 2010 prices
380000
360000
340000
320000
300000
BB 2003
280000
260000
240000
220000
1991 Q1
1991 Q3
1992 Q1
1992 Q3
1993 Q1
1993 Q3
1994 Q1
1994 Q3
1995 Q1
1995 Q3
1996 Q1
1996 Q3
1997 Q1
1997 Q3
1998 Q1
1998 Q3
1999 Q1
1999 Q3
2000 Q1
2000 Q3
2001 Q1
2001 Q3
2002 Q1
2002 Q3
2003 Q1
2003 Q3
2004 Q1
2004 Q3
2005 Q1
2005 Q3
2006 Q1
2006 Q3
2007 Q1
2007 Q3
2008 Q1
2008 Q3
2009 Q1
2009 Q3
2010 Q1
2010 Q3
2011 Q1
2011 Q3
2012 Q1
2012 Q3
CVM GDP at Basic Prices, as at BB 2004
400000
£ millions, 2010 prices
380000
360000
340000
320000
300000
BB 2003
BB 2004
280000
260000
240000
220000
1991 Q1
1991 Q3
1992 Q1
1992 Q3
1993 Q1
1993 Q3
1994 Q1
1994 Q3
1995 Q1
1995 Q3
1996 Q1
1996 Q3
1997 Q1
1997 Q3
1998 Q1
1998 Q3
1999 Q1
1999 Q3
2000 Q1
2000 Q3
2001 Q1
2001 Q3
2002 Q1
2002 Q3
2003 Q1
2003 Q3
2004 Q1
2004 Q3
2005 Q1
2005 Q3
2006 Q1
2006 Q3
2007 Q1
2007 Q3
2008 Q1
2008 Q3
2009 Q1
2009 Q3
2010 Q1
2010 Q3
2011 Q1
2011 Q3
2012 Q1
2012 Q3
CVM GDP at Basic Prices, as at BB 2005
400000
£ millions, 2010 prices
380000
360000
340000
320000
BB 2003
300000
BB 2004
BB 2005
280000
260000
240000
220000
1991 Q1
1991 Q3
1992 Q1
1992 Q3
1993 Q1
1993 Q3
1994 Q1
1994 Q3
1995 Q1
1995 Q3
1996 Q1
1996 Q3
1997 Q1
1997 Q3
1998 Q1
1998 Q3
1999 Q1
1999 Q3
2000 Q1
2000 Q3
2001 Q1
2001 Q3
2002 Q1
2002 Q3
2003 Q1
2003 Q3
2004 Q1
2004 Q3
2005 Q1
2005 Q3
2006 Q1
2006 Q3
2007 Q1
2007 Q3
2008 Q1
2008 Q3
2009 Q1
2009 Q3
2010 Q1
2010 Q3
2011 Q1
2011 Q3
2012 Q1
2012 Q3
CVM GDP at Basic Prices, as at BB 2006
400000
£ millions, 2010 prices
380000
360000
340000
320000
BB 2003
300000
BB 2004
BB 2005
280000
BB 2006
260000
240000
220000
1991 Q1
1991 Q3
1992 Q1
1992 Q3
1993 Q1
1993 Q3
1994 Q1
1994 Q3
1995 Q1
1995 Q3
1996 Q1
1996 Q3
1997 Q1
1997 Q3
1998 Q1
1998 Q3
1999 Q1
1999 Q3
2000 Q1
2000 Q3
2001 Q1
2001 Q3
2002 Q1
2002 Q3
2003 Q1
2003 Q3
2004 Q1
2004 Q3
2005 Q1
2005 Q3
2006 Q1
2006 Q3
2007 Q1
2007 Q3
2008 Q1
2008 Q3
2009 Q1
2009 Q3
2010 Q1
2010 Q3
2011 Q1
2011 Q3
2012 Q1
2012 Q3
CVM GDP at Basic Prices, as at BB 2007
400000
£ millions, 2010 prices
380000
360000
340000
320000
BB 2003
BB 2004
300000
BB 2005
BB 2006
280000
BB 2007
260000
240000
220000
1991 Q1
1991 Q3
1992 Q1
1992 Q3
1993 Q1
1993 Q3
1994 Q1
1994 Q3
1995 Q1
1995 Q3
1996 Q1
1996 Q3
1997 Q1
1997 Q3
1998 Q1
1998 Q3
1999 Q1
1999 Q3
2000 Q1
2000 Q3
2001 Q1
2001 Q3
2002 Q1
2002 Q3
2003 Q1
2003 Q3
2004 Q1
2004 Q3
2005 Q1
2005 Q3
2006 Q1
2006 Q3
2007 Q1
2007 Q3
2008 Q1
2008 Q3
2009 Q1
2009 Q3
2010 Q1
2010 Q3
2011 Q1
2011 Q3
2012 Q1
2012 Q3
CVM GDP at Basic Prices, as at BB 2008
400000
£ millions, 2010 prices
380000
360000
340000
320000
BB 2003
BB 2004
300000
BB 2005
BB 2006
280000
BB 2007
BB 2008
260000
240000
220000
1991 Q1
1991 Q3
1992 Q1
1992 Q3
1993 Q1
1993 Q3
1994 Q1
1994 Q3
1995 Q1
1995 Q3
1996 Q1
1996 Q3
1997 Q1
1997 Q3
1998 Q1
1998 Q3
1999 Q1
1999 Q3
2000 Q1
2000 Q3
2001 Q1
2001 Q3
2002 Q1
2002 Q3
2003 Q1
2003 Q3
2004 Q1
2004 Q3
2005 Q1
2005 Q3
2006 Q1
2006 Q3
2007 Q1
2007 Q3
2008 Q1
2008 Q3
2009 Q1
2009 Q3
2010 Q1
2010 Q3
2011 Q1
2011 Q3
2012 Q1
2012 Q3
CVM GDP at Basic Prices, as at BB 2009
400000
£ millions, 2010 prices
380000
360000
340000
320000
BB 2003
BB 2004
BB 2005
300000
BB 2006
BB 2007
280000
BB 2008
BB 2009
260000
240000
220000
1991 Q1
1991 Q3
1992 Q1
1992 Q3
1993 Q1
1993 Q3
1994 Q1
1994 Q3
1995 Q1
1995 Q3
1996 Q1
1996 Q3
1997 Q1
1997 Q3
1998 Q1
1998 Q3
1999 Q1
1999 Q3
2000 Q1
2000 Q3
2001 Q1
2001 Q3
2002 Q1
2002 Q3
2003 Q1
2003 Q3
2004 Q1
2004 Q3
2005 Q1
2005 Q3
2006 Q1
2006 Q3
2007 Q1
2007 Q3
2008 Q1
2008 Q3
2009 Q1
2009 Q3
2010 Q1
2010 Q3
2011 Q1
2011 Q3
2012 Q1
2012 Q3
CVM GDP at Basic Prices, as at BB 2010
400000
£ millions, 2010 prices
380000
360000
340000
BB 2003
320000
BB 2004
BB 2005
300000
BB 2006
BB 2007
280000
BB 2008
BB 2009
BB 2010
260000
240000
220000
1991 Q1
1991 Q3
1992 Q1
1992 Q3
1993 Q1
1993 Q3
1994 Q1
1994 Q3
1995 Q1
1995 Q3
1996 Q1
1996 Q3
1997 Q1
1997 Q3
1998 Q1
1998 Q3
1999 Q1
1999 Q3
2000 Q1
2000 Q3
2001 Q1
2001 Q3
2002 Q1
2002 Q3
2003 Q1
2003 Q3
2004 Q1
2004 Q3
2005 Q1
2005 Q3
2006 Q1
2006 Q3
2007 Q1
2007 Q3
2008 Q1
2008 Q3
2009 Q1
2009 Q3
2010 Q1
2010 Q3
2011 Q1
2011 Q3
2012 Q1
2012 Q3
CVM GDP at Basic Prices, as at BB 2011
400000
£ millions, 2010 prices
380000
360000
340000
BB 2003
320000
BB 2004
BB 2005
BB 2006
300000
BB 2007
BB 2008
280000
BB 2009
BB 2010
260000
BB 2011
240000
220000
1991 Q1
1991 Q3
1992 Q1
1992 Q3
1993 Q1
1993 Q3
1994 Q1
1994 Q3
1995 Q1
1995 Q3
1996 Q1
1996 Q3
1997 Q1
1997 Q3
1998 Q1
1998 Q3
1999 Q1
1999 Q3
2000 Q1
2000 Q3
2001 Q1
2001 Q3
2002 Q1
2002 Q3
2003 Q1
2003 Q3
2004 Q1
2004 Q3
2005 Q1
2005 Q3
2006 Q1
2006 Q3
2007 Q1
2007 Q3
2008 Q1
2008 Q3
2009 Q1
2009 Q3
2010 Q1
2010 Q3
2011 Q1
2011 Q3
2012 Q1
2012 Q3
CVM GDP at Basic Prices, as at BB 2012
400000
£ millions, 2010 prices
380000
360000
340000
BB 2003
BB 2004
320000
BB 2005
BB 2006
300000
BB 2007
BB 2008
280000
BB 2009
BB 2010
260000
BB 2011
BB 2012
240000
220000
1991 Q1
1991 Q3
1992 Q1
1992 Q3
1993 Q1
1993 Q3
1994 Q1
1994 Q3
1995 Q1
1995 Q3
1996 Q1
1996 Q3
1997 Q1
1997 Q3
1998 Q1
1998 Q3
1999 Q1
1999 Q3
2000 Q1
2000 Q3
2001 Q1
2001 Q3
2002 Q1
2002 Q3
2003 Q1
2003 Q3
2004 Q1
2004 Q3
2005 Q1
2005 Q3
2006 Q1
2006 Q3
2007 Q1
2007 Q3
2008 Q1
2008 Q3
2009 Q1
2009 Q3
2010 Q1
2010 Q3
2011 Q1
2011 Q3
2012 Q1
2012 Q3
CVM GDP at Basic Prices, as at BB 2013
400000
£ millions, 2010 prices
380000
360000
340000
BB 2003
BB 2004
320000
BB 2005
BB 2006
BB 2007
300000
BB 2008
BB 2009
280000
BB 2010
BB 2011
260000
BB 2012
BB 2013
240000
220000
The Recession: Q1 2008 to Q3 2009
Chain volume measure GDP at Basic Prices,
from BB 2008 to BB 2012
101
2008 Q1 = 100, 2009
100
99
98
BB 2008
97
BB 2009
BB 2010
96
BB 2011
BB 2012
95
94
93
92
The Recession: Q1 2008 to Q3 2009
Chain volume measure GDP at Basic Prices,
from BB 2008 to BB 2013
101
2008 Q1 = 100, 2010
100
99
98
BB 2008
BB 2009
97
BB 2010
BB 2011
96
BB 2012
BB 2013
95
94
93
92
Revisions to Growth
• Preliminary to QNA growth
• Last 26 periods
• Average -0.01 p.p: not biased
• Absolute average 0.12 p.p
• 7 times unchanged;12 times by +/-0.1
p.p, 4 times by +/-0.2 p.p
• Q4 2009 revised by 0.3 p.p
• Q1 2009 revised by -0.5 p.p (Blue Book)
• No benefit in delaying preliminary
estimate from 25 days to 13 weeks
QNA to Latest
• Evidence from the recession incomplete
• No evidence of bias yet
• Actual revisions now negative
• +0.2 p.p for period 1998 to 2007
• -0.2 p.p for period 2008 to 2010
• Absolute average revisions higher
• 0.4 p.p for period 1998 to 2007
• 0.5 p.p for period 2008 to 2010
• Impact of methodological changes
• Continue to monitor closely
Nominal GDP
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The poor relative in the media
Possible MPC spotlight
ONS setting up a review of methodology
Revisions performance key
Work in early stages
Revisions to annual nominal GDP growth by BB
8.0%
6.0%
4.0%
BB00
BB01
BB02
2.0%
BB03
BB04
0.0%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
BB05
BB06
BB07
-2.0%
BB08
BB09
-4.0%
BB10
BB11
BB12
-6.0%
BB13
Nominal Revisions at 2nd estimate
2nd estimate and QNA GDP growth estimates - nominal
3
percentage growth, quarter on quarter
2
1
0
M2
QNA
-1
-2
-3
-4
2001 Q1
2001 Q2
2001 Q3
2001 Q4
2002 Q1
2002 Q2
2002 Q3
2002 Q4
2003 Q1
2003 Q2
2003 Q3
2003 Q4
2004 Q1
2004 Q2
2004 Q3
2004 Q4
2005 Q1
2005 Q2
2005 Q3
2005 Q4
2006 Q1
2006 Q3
2006 Q4
2006Q2
2007 Q1
2007 Q2
2007 Q3
2007 Q4
2008 Q1
2008 Q2
2008 Q3
2008 Q4
2009 Q1
2009 Q2
2009 Q3
2009 Q4
2010 Q1
2010 Q2
2010 Q3
2010 Q4
2011 Q1
2011 Q2
2011 Q3
2011 Q4
2012 Q1
2012 Q2
2012 Q3
2012 Q4
2013 Q1
2013 Q2
percent growth quarter on quarter
CVM revisions on the same basis
2nd estimate and QNA GDP growth estimates, CVM
3
2
1
0
-1
-2
-3
M2
QNA
CVM revisions at 1st balanced BB
2.5
2nd estimate and Balanced BB1 estimates, GDP growth, CVM
2
growth quarter on quarter
1.5
1
0.5
0
-0.5
-1
-1.5
-2
-2.5
M2
BB1
Nominal GDP at 1st balanced BB
2nd estimate and Balanced BB1 estimates, GDP growth,
nominal
2.5
2
growth, quarter on quarter
1.5
1
0.5
0
-0.5
-1
-1.5
-2
-2.5
M2
Balanced BB1
CVM GDP revisions across vintages
changes to GDP growth estimate, cvm
2
1.5
change in growth estimate
1
M2 to QNA
0.5
2nd QNA
3rd QNA
0
4th QNA
5th QNA
1st balanced BB
-0.5
2nd balanced BB
3rd Balanced BB
-1
-1.5
-2
Nominal GDP revs across vintages
Changes to GDP growth estimates, nominal
2
1.5
1
M2 to QNA
update
to growth
0.5
2nd QNA
3rd QNA
0
4th QNA
5th QNA
1st balanced BB
-0.5
2nd balanced BB
3rd Balanced BB
-1
-1.5
-2
Total updates - CVM
total updates to growth, cvm
4
3.5
3
2.5
2
1.5
1
0.5
0
total of abs values of updates M2 to BB3
abs of total updates M2 to BB3
2001 Q1
2001 Q2
2001 Q3
2001 Q4
2002 Q1
2002 Q2
2002 Q3
2002 Q4
2003 Q1
2003 Q2
2003 Q3
2003 Q4
2004 Q1
2004 Q2
2004 Q3
2004 Q4
2005 Q1
2005 Q2
2005 Q3
2005 Q4
2006 Q1
2006 Q2
2006 Q3
2006 Q4
2007 Q1
2007 Q2
2007 Q3
2007 Q4
2008 Q1
2008 Q2
2008 Q3
2008 Q4
2009 Q1
2009 Q2
2009 Q3
2009 Q4
2010 Q1
2010 Q2
2010 Q3
2010 Q4
2011 Q1
2011 Q2
2011 Q3
2011 Q4
2012 Q1
2012 Q2
2012 Q3
2012 Q4
2013 Q1
Total updates – Nominal GDP
Total updates: nominal
4
3.5
3
2.5
2
1.5
1
0.5
0
total abs values M2 to BB3
abs of total updates
Conclusions
• Revisions between Preliminary and QNA for
real GDP continue to be small and unbiased
• Subsequent revisions have been higher since
2008 but still unbiased
• Partly explained by BB11 methods changes
• Impact of Supply and Use
• ONS monitoring methods through the
recession and recovery
• Nominal quarterly GDP revisions being used
as a guide to possible improvements
What’s next?
• BB 2014 – New National Accounts framework
(ESA10)
• Also a range of Gross National Income (GNI)
reservations to clear
• Analyse revisions by reason rather than over
time
• Displaying uncertainty in estimates
• Splitting data revisions from methodological
revisions
• Continue to monitor revisions
References
Revisions policy
http://www.ons.gov.uk/ons/guide-method/method-quality/specific/economy/revisions/economic-statistics/nationalaccounts-revisions-policy.pdf
Detail of Supply and Use tables structure
http://www.ons.gov.uk/ons/guide-method/method-quality/specific/economy/input-output/input-output-supply-anduse-tables-structure-overview.pdf
Revisions triangles
http://www.ons.gov.uk/ons/publications/re-reference-tables.html?edition=tcm%3A77-240821
Improvements to the measurement of Insurance Services
http://www.ons.gov.uk/ons/guide-method/method-quality/specific/economy/national-accounts/methodology-andarticles/2011-present/blue-book-2012-insurance-services/index.html
Various National Accounts articles, including "National Accounts: A short guide"
http://www.ons.gov.uk/ons/guide-method/method-quality/specific/economy/national-accounts/methodology-andarticles/2011-present/index.html
Why is GDP revised article from June 2013
http://www.ons.gov.uk/ons/guide-method/method-quality/specific/economy/national-accounts/articles/2011present/why-is-gdp-revised-/updated-analysis--why-is-gdp-revised-.pdf
Questions
Email: [email protected]