Who Are You Going to Believe – The Commerce Dept. or ISM, Autodata & the BLS?

by Paul Kasriel
Financial Sense

This past July 29, the Commerce Department surprised the economic cognoscenti by reporting that its advance estimate of second quarter real GDP annualized growth was a paltry 1.2%. The consensus estimate of Street economists was north of 2%. Oh my, with growth this anemic, the Fed certainly would not entertain raising its policy interest rates at its upcoming September 20-21 meeting, would it? Yes, it might. And here’s why.

Firstly, the advance estimate of GDP is called that because it is made in advance of the Commerce Department having all of the data that goes into the GDP calculation. For example, Commerce does not have the complete inventory, trade and construction data.

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