Yesterday morning the BEA released the third estimate of Q4 GDP. The BEA reported that Real gross domestic product "increased at an annual rate of 3.0 percent in the fourth quarter of 2011", the same as the previous estimate. Also in the release, the BEA reported the real gross domestic income (GDI) increased at a 4.4% annualized rate in Q4.
There are really two measures of GDP: 1) real GDP, and 2) real Gross Domestic Income. Some economists believe that that GDI is often more accurate than GDP.
During the worst period of the last recession, GDI fell more than GDP. In subsequent revisions, GDP was revised down showing the economy contracted more than originally reported - and closer to the original GDI reports, which may mean the GDI could be a more accurate measure of economic growth.
The opposite has happened over the last two quarters - GDI is showing stronger growth than GDP - and this suggests that 2nd half 2011 GDP might be revised up with the next annual revision that will be released on July 27th (Revised Estimates will be provided for years 2009 through 2011).
With its third revision of fourth-quarter GDP, issued Thursday, the agency also released its GDI estimates. Here’s what they show:
GDP Q4 2011 up 3.0%
GDI Q4 2011 up 4.4%
GDP Q3 2011 up 1.8%
GDI Q3 2011 up 2.6%
FULL 2011 GDP: up 1.7%
FULL 2011 GDI: up 2.1%
Hopefully this means that actual GDP growth moving forward could be higher than actual numbers reported assuming of course that GDI continues to grow at a faster pace. We hope this trend can continue through the balance of 2012.
