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Is GDP Overstating Economic Activity?

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Since late 2015, growth in real GDP has consistently exceeded that in real GDI, a prominent alternative measure of aggregate output, with an average difference of about 0.65 percentage point. Is real GDP overstating the expansion? One way to address this question is by comparing the accuracy of these measures in forecasting a benchmark measure of economic activity, the Chicago Fed National Activity Index. The comparison suggests that GDP consistently outperforms GDI in predicting recent real economic activity. Therefore, the weaker GDI growth does not necessarily indicate slower economic growth.

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  • Zheng Liu & Mark M. Spiegel & Eric Tallman, 2018. "Is GDP Overstating Economic Activity?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    • Handle: RePEc:fip:fedfel:00165
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    1. Jeremy J. Nalewaik, 2012. "Estimating Probabilities of Recession in Real Time Using GDP and GDI," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 44(1), pages 235-253, February.
    2. Matteo Barigozzi & Matteo Luciani, 2018. "Do National Account Statistics Underestimate US Real Output Growth?," FEDS Notes 2018-01-09-1, Board of Governors of the Federal Reserve System (U.S.).
    3. Barigozzi, Matteo & Luciani, Matteo, 2018. "Do National Account Statistics Underestimate US Real Output Growth?," FEDS Notes 2017-01-09, Board of Governors of the Federal Reserve System (U.S.).
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    2. Saito, Makoto, 2022. "On expenditure/income discrepancies in national accounts in the presence of two price units," Japan and the World Economy, Elsevier, vol. 64(C).

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