Since the pandemic, economic growth and activity data has generally been revised stronger. In other words, an economy is nearly always doing better than first reported. Since the start of 2021, almost two-thirds of German growth-related data revisions have been positive. In the case of the US positive revisions occur almost 63% of the time.

Why are things better than first reported? One reason may be structural change in the economy. Data collection is slow to adjust as people change how they work. The economic activity associated with self-employment may be under reported at first, for instance. It may also be that only people who want to complain are eager to fill in government data surveys. The pessimists send their forms in early, while those who are doing OK take their time. Markets and media emphasise the initial data release – because markets and media love novelty. But focusing on incorrect data just because it is new creates a cost. The failure to give revisions equal attention may damage economically important “animal spirits” or confidence, with wider implications.

Main contributor - Paul Donovan

Content is a product of the Chief Investment Office (CIO).

Original report - Is new data good data?, 05 August 2022.