New report - Last year's recession not that mild
WASHINGTON -- Last year's recession, currently viewed as the mildest in U.S. history, may not have been so mild after all, some private economists said after looking at new government data Tuesday.
A state-by-state report released by the Commerce Department showed that Americans' incomes for all of 2001 were considerably smaller than the government had previously estimated in another report on the gross domestic product, the broadest measure of the economy's health.
Some private economists believe the lower estimate of Americans' personal incomes -- a component in calculating the GDP -- will result in a significant downward revision to GDP for all of 2001. Last year, the economy, already slumping when it was jolted by the Sept. 11 terror attacks, grew by just 1.2 percent, a big slowdown from 4.1 percent increases posted in 1999 and 2000.
Each year, the government revises estimates of GDP for certain periods, based on more complete data. It will release annual benchmark revisions for 2001, along with 1999 and 2000, on July 31.
Tuesday's report showed that Americans' incomes grew 3.7 percent in 2001, while the most recent GDP report released in March said that incomes rose by 4.9 percent. The difference of 1.2 percentage points works out to $90 billion.
"It sounds to me that they are going to have to revise away a lot of last year's growth and it will turn out that the recession was indeed a recession and was more severe than previously thought," said Mark Zandi, chief economist at Economy.com.
Even if that turns out to be the case, economists said it doesn't change the widespread belief the economy is now recovering from a recession that began in March 2001.
Steve Landefeld, director of the Commerce Department's Bureau of Economic Analysis, which produces the GDP and personal income reports, wouldn't comment on potential revisions. But he did say that the initial estimates in the GDP reports included assumptions the government makes about wages and salaries that often get revised once actual income statistics are available.