|By FLOYD NORRIS|
The first quarter of this year was the worst for
During the same period, employers hired more people than in any quarter over the last six years, signaling gathering strength in the economy.
It is hard to imagine how both of those statements could be true, but they are what government statistics indicate.
While the employment numbers have been strong, the government sharply cut its estimate of first-quarter gross domestic product late last month. It had previously said the economy declined at an annual rate of 1 percent during the quarter — a small dip that could be explained by severe weather in much of the country. The new figures showed a 2.9 percent rate of decline, the worst since a 5.4 percent drop in the first three months of 2009.
What happened? Put simply, a single government survey produced highly dubious numbers. Those who conduct the survey say it was done normally and that nothing suspicious surfaced in the responses. But — particularly in the case of one vital part of the economy — that survey contradicted other available information. The result was suspiciously low revenue estimates for companies in both health services and food retailing.
“If activity in these sectors was really as weak” as the G.D.P. figures indicate, said
The big decline in estimates of the size of
In May, the
There was a significant increase in
But the revised estimate released in June said that spending on health care services fell at an annual rate of 0.9 percent. Instead of the largest increase in more than a decade, it was the first decline in nearly half a century, since the third quarter of 1965. That one change accounted for most of the decline in the estimate for overall first-quarter G.D.P.
Behind that reversal were the results of a quarterly survey of service providers. The survey, conducted by the
Because that survey is supposed to cover all sources of revenue, including money from patients, insurance companies and the government, it is taken as definitive in calculating spending on health care services.
There are some possible explanations. Many of those who signed up for private health insurance under the Affordable Care Act did not do so until March and did not become covered until April or May. It could make sense for such people to defer some health care until they were covered.
That may have been what happened in 1965, the other year when health care spending declined in a quarter. That occurred while
Still, if that is the explanation, then it would hardly be reasonable to assume that weakness in health care spending continued in the second quarter. But
Stunned by the G.D.P. report,
During the same period, the economy added an average of 231,000 jobs a month, according to the
If the first-quarter G.D.P. report is wrong, can we expect it to be changed? The
Whether or not the estimates are changed soon, the wildly fluctuating reports for the first quarter remind us that “there are literally hundreds of preliminary assumptions that go into estimates of economic barometers,” said
This is, he said, one of those times. “The first-quarter real G.D.P. number simply makes no sense.”
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