What BEA revisions mean for Fed

- "The Q2 real GDP data published this past July 30 came with a major revision of historical data by the Bureau of Economic Analysis (BEA)."
- "The economic analysts of the world were left slack-jawed by the disappearance of $100 billion from U.S. GDP for 2010Q1. Consumption alone was revised down $134 billion. As a result, instead of being in expansion territory, it turns out consumption is actually only midway up the recovery curve."
- "The labour market must begin creating enough private-sector jobs to bring down the unemployment rate. Otherwise, the Federal Reserve will not be able to tolerate the situation, as it would ultimately constitute a disinflationary environment."
- "On a more positive note, the level of labour productivity in the United States seems to have hit a wall in the short term. For the first time since the start of the recession, the composition of GDP growth has been geared towards employment rather than productivity."
- "This said, as the level of resource utilization in the economy has been pegged back, this implicitly modifies the impact of past monetary easing by the Federal Reserve."
- "If the unemployment rate does not begin to trend down, the Fed will have no choice but to step in once again."

NBC Weekly Economic Letter 20100820

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