Recession's Severity Scaled Down; GDP Dropped Less Than Earlier Reported, Agency Says
The 2001 recession, already among the mildest in modern U.S. economic history, was even slightly shallower than earlier estimated, according to a comprehensive revision of national income and production figures released yesterday by the Commerce Department.</br></br>The drop in the nation's gross domestic product from the first quarter of 2001 to the fourth quarter, when the recession ended, was only 0.5 percent rather than 0.6 percent, according to the revisions, which are done every five years. However, the update also shows that the economy contracted slightly in the July-September period of 2000, as well as in the first three quarters of 2001.</br></br>The latest figures revised were those for the second quarter of this year. For the third quarter, the department has estimated that the economy grew at an 8.2 percent annual rate after adjustment for inflation, but it will revise that figure late this month.</br></br>The Commerce Department's Bureau of Economic Analysis, which is responsible for producing the national income and GDP numbers, altered several definitions and methodologies in an effort to track the rapid changes in the complex U.S. economy. The new figures paint much the same picture as the old ones -- for the past 10 years, the average growth rate of the economy is still 3.2 percent a year -- but several important details for the past year or two are different.</br></br>For example, U.S. corporate profits last year were $904.2 billion, nearly $120 billion higher than previously estimated. The upward revision was primarily the result of an adjustment in the treatment of stock options and when they are reported as an expense on corporate books. In the second quarter of this year, this profit measure, which is adjusted for capital consumption and inventory gains, was $1.0228 trillion on an annualized basis.