1115.org

The endpoint of that logical progression is the Bush administration’s economic statistics.

The Bureau of Economic Analysis has just — quietly, without much blowing of trumpets — revised downwards the real GDP growth estimates for each of the last three years.

Estimates, you may remember from elementary statistics, are subject to random error. And the thing about random error is that it’s randomly positive or negative. Random error doesn’t lead you to consistently misoversestimate. So when you find initial estimates consistently higher than they should be, the ugly word that raises its head to replace “random error” is bias. Bias is a very bad word to economists and forecasters. It’s pretty much the economic forecast equivalent of perjury.

Here’s a WSJ summary of the press release put out by the BEA this morning:

The economy grew at a 3.4% in the second quarter, in line with economists’ expectations, but growth was slower than previously estimated in each of the last three years, the Bureau of Economic Analysis said.

The changes lowered the average annual growth of real GDP to 3.2% from 2004 (sic, should be 2003) to 2006, 0.3 percentage point less than the earlier figures. The 2006 growth rate was revised down 0.4 percentage point to 2.9%, driven by downward revisions to investory (sic) investment, personal consumption expenditures for durable goods, state and local government spending and exports. The rate in 2005 fell to 3.1% from 3.2%, and the 2004 rate dropped to 3.6% from 3.9%

The BEA’s annual revisions are made each July to incorporate new and more comprehensive data. The downward revision to spending could add some doubts to already softer numbers from the latest report. Real personal consumption expenditures increased 1.3% in the second quarter, down from a 3.7% increase in the first quarter. Durable goods were up 1.6% vs. 8.8% in the first quarter, while nondurable goods dropped 0.8% compared to an earlier increase of 3%.

So the real GDP growth for the last three years is not 3.9%, 3.2% and 3.3% as last reported. The real real GDP growth turns out to be 3.6%, 3.1% and 2.9%.

Maybe you have to be an economist to appreciate that those are significant revisions. But trust me, significant they are.

And let’s not miss the fact that the revised numbers show a declining trend, which may not please Bush or the eternally optimistic Hank Paulson too much.

Also, it’s not too surprising to see the 2006 estimate being revised in July 2007. But to see the 2004 estimate still being revised in July 2007 — and by a whopping 0.3% — boggles the mind. Frankly, it insults the intelligence.

That 2004 estimate, by the way, was last revised on December 11, 2006, down of course, from 4.2% to 3.9%.

So the estimate that was dropped to 3.6% today stood at 4.2% just eight months ago. How could it be so hideously overestimated at that point, almost two years after the end of 2004? For some strange reason, the BEA is not saying.

When the advance estimates for 2004 were released, in February 2005, this was the story:

In 2004, real gross domestic product (GDP) increased 4.4 percent, the largest increase since the 4.5-percent increase in 1999

And right there, in a nutshell, you have the truth about the Bush administration’s claims about the performance of the Bush economy. Phrases that come to mind include not just “smoke and mirrors” but also “shell game”.

But I don’t suppose anyone expected anyway that these people — who have lied so cheerfully for so long about everything else — would be telling us the truth about the economy.