How Estimates of 2009 GDP Changed
The BEA revises its estimates when it gets new data, so even years after the fact, the GDP for any given year might be updated. In 2010, the BEA’s GDP estimate for 2009 was $14.119 trillion. That number was revised to $13.939 trillion in 2011 and $14.419 trillion in 2015. Below are the BEA’s 2018 revised GDP estimates for each quarter in 2009 with the prior estimates in parentheses:
Q1: $14.394 trillion ($14.383 trillion in 2015 revision, $14.381 trillion in 2013 revision, $13.893 trillion in 2011 revision, $14.049 trillion in 2010).Q2: $14.352 trillion ($14.340 trillion in 2015 revision, $14.342 trillion in 2013 revision, $13.854 trillion in 2011, $14.034 trillion in 2010).Q3: $14.420 trillion ($14.384 trillion in 2015 revision, $14.384 trillion in 2013 revision, $13.920 trillion in 2011, $14.114 trillion in 2010).Q4: $14.628 trillion ($14.566 trillion in 2015 revision, $14.564 trillion in 2013 revision, $14.087 trillion in 2011, $14.277 trillion in 2010).
2009 Overall
In 2009, the GDP growth rate was -2.5%. In other words, the economy contracted 2.5%. This measures the changes in real GDP from quarter to quarter. The ideal GDP growth rate is between 2% to 3%. Less than 2% will not create new jobs for a growing labor force, and more than 3% means the economy is headed toward an asset bubble. This generally creates inflation and rising prices. Higher prices sometimes will cool off demand, but more often, the bubble bursts and the economy descends into recession. At that point, the economy contracts, and the GDP growth rate turns negative. Most estimates of economic production are nominal GDP. However, it’s important to take out the effects of price increases, which is done in real GDP. Growth rates use real GDP to compare growth from one quarter to the next. The original GDP growth estimate for 2009 was -2.4%, followed by revisions of -2.6% in 2010, -3.5% in 2011, and -3.1% in 2012.
First Quarter
In the first quarter of 2009, GDP growth was -4.4%. The original estimate of -6.4% in first quarter 2009 was revised to -4.9% in 2010, -6.7% in 2011, -5.3% in 2012, and -5.4% in 2015. Below is a closer look at the BEA’s 2009 estimates as it acquired more data throughout the year:
Advance estimate
The economy fell 6.1%, partly due to leaner inventories. This was the third declining quarter in a row, and the fourth since the recession began in Q4 2007. The slowdown in Q1 was only slightly less than the 6.3% drop in Q4 2008. This is the first time since the Great Depression that the GDP fell more than 5% two quarters in a row. A large contributor to the decline was a decrease of business inventories. Lean inventories can lead to a potential boost in production the next quarter if orders hold steady. The decrease of business inventory contributed 2.79 points to the Q1 decline and 0.11 points in Q4 2008. When inventories are taken out of the calculations, Q1 GDP fell 3.4% compared to 6.2% in Q4 2008. However, the near-bankruptcy of the U.S. auto industry contributed 1.36 points to the Q1 decline and 2.01 points to the Q4 2008 decline. Another contributor was the fall-off in commercial construction.
Second estimate
The economy contracted 5.7% in Q1. The slump in U.S. car sales contributed 1.36 points to the Q1 decline and 2.01 points to the Q4 2008 decline. Another contributor was the fall-off in commercial construction.
Third estimate
Growth was down 5.5%. The economy contracted more than 5% for two quarters in a row, the first time since the Great Depression.
Second Quarter
In the second quarter, GDP growth was -0.6%. A 2011 revision had it -0.7%, and it was revised to -0.3% in 2012, -0.4% in 2013, and -0.5% in 2015. Below is a closer look at how the BEA estimates changed that year:
Advance estimate
Government spending propped up the economy, which contracted 1%—the fourth contraction in a row and the fifth since the recession started in 2007. U.S. car sales improved and were expected to improve further in Q3 with the Cash for Clunkers program. Government stimulus propped up the economy and kept the recession from turning into a depression. However, a return to normal bank lending was needed for a full recovery.
Second estimate
In a very unusual move, the BEA did not adjust its estimate, which remained at -1%. The slump would have been much worse without the Economic Stimulus Program. Government spending contributed 1.25% to GDP growth, according to Econompic.
Third estimate
The economy declined 0.7%.
Third Quarter
Growth was 1.5% in the third quarter. It had been estimated at 1.7% in 2011, then revised to 1.4% in 2012, and 1.3% in 2015. Below is a closer look at how the BEA estimates changed that year:
Advance estimate
The economy grew 3.5%, which meant the recession was over. The Economic Stimulus Package, which was approved in January 2009, stimulated the economy enough to pull it out of recession in Q3.
Second estimate
Growth was revised down to 2.8%. More data came in over the last month, which showed that commercial real estate and personal spending wasn’t as strong as initially estimated.
Third estimate
Growth was revised down to 2.2%.
Fourth Quarter
Growth was 4.5% in the fourth quarter. It had been estimated at 5% in 2010, then revised to 3.8% in 2011, 4% in 2012, and 3.9% in 2015. Below is a closer look at how the BEA estimates changed that year:
Advance estimate
The economy grew 5.7%, but half of that growth was based on businesses re-stocking low inventory. The economy would have only grown 2.3% without the inventory adjustment, according to econo-blogger Calculated Risk. Real estate and consumer spending actually slowed in Q4. These are needed to sustain any lasting recovery.
Second estimate
Economic growth was revised up to 5.9%, but businesses re-stocking low inventory drove 4 points of that growth. Econo-blogger Calculated Risk noted that spending on personal consumption and residential investment were both revised down in Q4.
Third estimate
The report said 5.6% growth, but according to econo-blogger Calculated Risk, GDP growth would have been 2.3% without accounting for transitory inventory increases.
