MarketWatch staffer Andrea Riquier reports on the screw-up in Commerce Department arithmetic that may lead to a restatement of GDP to the better. It all comes down to counting properly in the area of private residential improvement spending.
The correction in the data calculations mean that the economy was actually better than it was thought to be, Riquier notes.
the improvements category account for about one-third of private residential spending, or 13% of the overall total. In November, improvements amounted to a seasonally adjusted annual rate of $144.26 billion.
The change will have a sizable impact on GDP. “The upward revision to spending in 2014 is enough to raise growth that year from 2.4% to 2.6%-2.7%,” wrote IHS Global Insight US economist Patrick Newport in a research note. “The revisions are likely to boost growth for 2015 as well.”