ONS reports that ONS actually quite good at estimating GDP

Estimates rarely change that much, but have got worse since the crash.

A new study by the ONS (pdf) on the practice of revising quarterly GDP reveals that, despite some high-profile revisions, they are actually doing pretty well.

The current practice for GDP figures is to release a preliminary estimate 25 days after the quarter ends, then update it for a second estimate a month later, and release a final estimate shortly before the next quarter ends – before starting the whole process again. Even after the "final" estimate is made, there's the possibility of still more releases:

As further data become available there are potential revisions to the quarterly GDP figures in subsequent QNA releases, as well as in the annual national accounts Blue Book publication.

The Blue Book process enables annual data to be balanced at a much more detailed level and is also the opportunity for major methodological changes to be introduced.

Whenever the preliminary estimate delivers surprising news – as it did with the most recent results – there is always a rush to point out that these estimates are usually revised (as indeed they are). But the overall picture remains remarkably accurate. The following chart compares the GDP growth given in the initial estimate to the final estimate given five years later.

 

There are some pretty large changes month-to-month, but only one revision in the last 20 years which changed the big picture in any substantial way (the near-collapse in growth in early 1998 actually appears not to have occurred).

Even when the whole period is covered, the authors conclude:

In broad terms the picture of growth in GDP over the period from 1961 to 2012 quarter two is similar, irrespective of the maturity of data, although there are some exceptions. In particular the differences caused by revisions in the late 1980s were previously discussed in Brown et al, where a period of consistent upward revisions led to the Pickford Review (1989). The review implemented a number of methodological changes including the publication of a single measure of GDP.

But what about the most recent period of recession and recovery?Has the ONS got worse at making those initial estimates due to the changed economic circumstances?

Maybe.

The below chart shows the absolute revisions to GDP estimates in the first two years. The Pickford review of 1989, which changed the methodology substantially, clearly worked, reducing the mean revision from a change of at least 0.5 points to one of barely 0.2 points. But while there was a period of unprecedented accuracy in the late 1990s and early 2000s, things have got marginally worse recently – even while staying significantly better than they had been two decades before.

 

As a result, the review concludes that:

There is some evidence that in the latest periods, the size of revision has increased [although not significantly]. . .

It is possible that the assumptions and methods underpinning the early estimates of GDP may not be as robust in periods of greater volatility or at turning points in the economy as they were during the long period of stability from 1992 to 2007.

The most important thing to note, however, is that there is no significant trend for the direction of the revision. Although it's usually positive, it hasn't been recently:

 

So if you are hoping that a GDP estimate will be revised, be careful what you wish for – it may not go the way you hope.

GDP percentage growth, quarter on same quarter 1 year ago - estimates.

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty
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The Future of the Left: trade unions are more important than ever

Trade unions are under threat - and without them, the left has no future. 

Not accepting what you're given, when what you're given isn't enough, is the heart of trade unionism.

Workers having the means to change their lot - by standing together and organising is bread and butter for the labour movement - and the most important part? That 'lightbulb moment' when a group of workers realise they don't have to accept the injustice of their situation and that they have the means to change it.

That's what happened when a group of low-paid hospital workers organised a demonstration outside their hospital last week. As more of their colleagues clocked out and joined them on their picket, thart lightbulb went on.

When they stood together, proudly waving their union flags, singing a rhythmic chant and raising their homemade placards demanding a living wage they knew they had organised the collective strength needed to win.

The GMB union members, predominantly BAME women, work for Aramark, an American multinational outsourcing provider. They are hostesses and domestics in the South London and Maudsley NHS Trust, a mental health trust with sites across south London.

Like the nurses and doctors, they work around vulnerable patients and are subject to verbal and in some cases physical abuse. Unlike the nurses and doctors their pay is determined by the private contractor that employs them - for many of these staff that means statutory sick pay, statutory annual leave entitlement and as little as £7.38 per hour.

This is little more than George Osborne's new 'Living Wage' of £7.20 per hour as of April.

But these workers aren't fighting for a living wage set by government or even the Living Wage Foundation - they are fighting for a genuine living wage. The GMB union and Class think tank have calculated that a genuine living wage of £10ph an hour as part of a full time contract removes the need for in work benefits.

As the TUC launches its 'Heart Unions' week of action against the trade union bill today, the Aramark workers will be receiving ballot papers to vote on whether or not they want to strike to win their demands.

These workers are showing exactly why we need to 'Heart Unions' more than ever, because it is the labour movement and workers like these that need to start setting the terms of the real living wage debate. It is campaigns like this, low-paid, in some cases precariously employed and often women workers using their collective strength to make demands on their employer with a strategy for winning those demands that will begin to deliver a genuine living wage.

It is also workers like these that the Trade Union Bill seeks to silence. In many ways it may succeed, but in many other ways workers can still win.

Osborne wants workers to accept what they're given - a living wage on his terms. He wants to stop the women working for Aramark from setting an example to other workers about what can be achieved.

There is no doubting that achieving higher ballot turn outs, restrictions on picket lines and most worryingly the use of agency workers to cover strikers work will make campaigns like these harder. But I refuse to accept they are insurmountable, or that good, solid organisation of working people doesn't have the ability to prevail over even the most authoritarian of legislation.

As the TUC launch their Heart Unions week of action against the bill these women are showing us how the labour movement can reclaim the demands for a genuine living wage. They also send a message to all working people, the message that the Tories fear the most, that collective action can still win and that attempts to silence workers can still be defeated.