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Federal Reserve Bank of San Francisco
FRBSF Economic Letter
Is GDP Overstating Economic Activity?
Zheng Liu
Mark M. Spiegel
Eric Tallman
Abstract

Since late 2015, growth in real GDP has consistently exceeded that in real GDI, a prominent alternative measure of aggregate output, with an average difference of about 0.65 percentage point. Is real GDP overstating the expansion? One way to address this question is by comparing the accuracy of these measures in forecasting a benchmark measure of economic activity, the Chicago Fed National Activity Index. The comparison suggests that GDP consistently outperforms GDI in predicting recent real economic activity. Therefore, the weaker GDI growth does not necessarily indicate slower economic growth.


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Zheng Liu & Mark M. Spiegel & Eric Tallman, "Is GDP Overstating Economic Activity?" , Federal Reserve Bank of San Francisco, FRBSF Economic Letter, number 14, 2018.
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