A preliminary estimate for Canadian 2010Q3 GDP growth

The August 2010 GDP numbers have been released (increase of 0.3% over July), so It's time once again to update my series of posts (most recent: 2010Q2) in which I try to take the GDP numbers from the first two months of a given quarter, mix them with the LFS numbers from the third month, and concoct a preliminary estimate for quarterly GDP growth. The BEA released theirs today (2.0%); here's mine: 1.5%.

It should be noted that that the result of this exercise is a probability distribution, not a single number. Its standard deviation is 0.5%, and the interquartile range is [1.2% , 1.9%].

Here is a table comparing the WCI 'backcasts' with the numbers produced by Statistics Canada:

Quarter	WCI estimate	First StatsCan release	Latest data
2009Q1	-6.9%	-5.4%	-7.0%
2009Q2	-3.4%	-3.4%	-2.8%
2009Q3	-0.4%	0.4%	0.9%
2009Q4	4.0%	5.0%	4.9%
2010Q1	5.5%	6.1%	5.8%
2010Q2	2.7%	2.0%	2.0%
2010Q3	1.5%

The slowdown we saw in 2010Q2 has continued through 2010Q3, and growth seems to be decelerating.

Comments

[Andrew F]

Did the Bank of Canada make a mistake by raising rates?

[Stephen Gordon]

I don't think so - GDP is now above its pre-recession peak. But I think it was right to pause when it did.

[Declan]

So far, it seems you underestimate when the housing market is improving, and overestimate when it is deteriorating. If the trend continues, we should come in around 1.3 or so....