1Q 2022 advance Real GDP is a mild recession -- two revisions in next two months may change that

(A)  Advance Real GDP (first estimate)

Down at a -1.4% annual rate

 

(B) Private inventory change down at a -0.84% annual rate

 

Real Final Sales (A - B) down at a -0.58% annual rate,

which is small enough to disappear in future revisions,

or double.

Atlanta Federal Reserve Bank GDP Now 1Q 2022 estimate as of yesterday, April 27, was +0.4% not that far from Real Final Sales number. Inventory changes are hard to predict. In two months, after two Real GDP revisions, we'll see how close GDP Now was. But If 1Q happens to be the first quarter of a recession, it will take at least one year before we have reliable 1Q 2022 Real GDP numbers. (explained below)

 Each of the dates below shows the real GDP annual growth rate of the economy immediately prior to a recession ( these are revised data, not the data released at the time ).

Real (inflation-adjusted) 

economic growth rates:
    •    September 1957:  3.07%
    •    May 1960:              2.06%
    •    January 1970:       0.32%
    •    December 1973:    4.02%
    •    January 1980:       1.42%
    •    July 1981:              4.33%
    •    July 1990:              1.73%
    •    March 2001:           2.31%
    •    December 2007:    1.97%
 
Final economic data revisions may take up to several years for release, after the original data were first released to the public.
.
Differences between preliminary and final data tend to be largest in the months just before, and just after, the start of a recession.

After the revisions, the initial good news morphs into bad news -- that's one reason why recessions are so hard to predict:
.
      Q1 2001 (beginning of a recession):
Original data:   +1.2%   GDP growth (annual rate)
     Final data:   (-1.1)%  GDP decline
(Note: Q2 2001 had +2.4% positive GDP growth DURING the recession)
.

.
      Q1 2008 (beginning of a recession):
Original data:   +1.0%   GDP growth (annual rate)
     Final data:   (-2.3%)  GDP decline
(Note: Q2 2008 had positive +2.1% GDP growth DURING the recession)
.
.
      May through August 1990:
Original data:  +480,000   job growth
     Final data:    (-221,000)  job decline
.
.
     January through April 2001:
Original data:  +105,000   job growth
     Final data:  (-233,000)  job decline
.
.
      February through May 2008:
Original data:  (-248,000)   job decline
     Final data:  (-468,000)   job decline