August Business Conditions Monthly

Chart 1. Latest revisions show GDP grew more slowly in recent years than previously believed.
As the recovery enters its seventh year, revised data reveal slower progress than previously estimated.

Six months into the year, a new report that includes data revisions from the Bureau of Economic Analysis shows that GDP grew more slowly in recent years than previously believed, making the current recovery the slowest in U.S. postwar history. We find that for the first quarter of 2015, economic weakness was temporary. Growth accelerated in the second quarter, resulting in a 1.5 percent annual rate for the first six months (see Chart 1).

Yet, overall, it appears that the tepid recovery has developed even more slowly than we thought, with some notable exceptions, such as the reversal of a previously reported 0.2 percent decline in the first quarter of 2015 to a 0.6 percent gain.

The cumulative effect of the revisions is significant – slicing the value of today’s GDP by almost a percentage point. These downward revisions to GDP may lead some Federal Reserve watchers to wonder whether interest rate decisions will differ from what forward guidance has led us to believe. Our expectations are that the Fed will implement the first rate hike in the coming months and additional future rate hikes will be made at a very gradual pace.

Next/Previous Section:
1. Overview
2. Economy
3. Inflation
4. Policy
5. Investing
6. Pulling it All Together/Appendix

Chart 1. Latest revisions show GDP grew more slowly in recent years than previously believed.