Residual Seasonality in GDP and GDI: Findings and Next Steps

This paper presents the results of a component-by-component review of seasonally adjusted estimates of gross domestic product (GDP) and gross domestic income (GDI), two widely followed economic measures published by the Bureau of Economic Analysis (BEA). The goal of the review was to test specific components for “residual seasonality” and, if present, to identify the main causes. The review found that the two most important causes of residual seasonality were (1) inconsistencies arising from the manner in which monthly source data are utilized in the compilation of quarterly GDP estimates and (2) issues arising from revision policies and practices that prevented the most recent seasonal adjustments from being applied to historical time series. This paper also discusses BEA's on-going three-phase strategy to improve its seasonal adjustment methods. The strategy, which was announced in the June 2015 Survey of Current Business, includes this review as well as a plan to release GDP and GDI estimates that are not seasonally adjusted. Such estimates will provide a valuable reference point when assessing the seasonally adjusted estimates. The three-phase strategy is scheduled to conclude in July 2018.