'We are Essentially Rewriting Economic History'

There will be a big revision of macroeconomic data in July:

Data shift to lift US economy by 3%, by Robin Harding, FT: The US economy will officially become 3 per cent bigger in July as part of a shake-up that will for the first time see government statistics take into account 21st century components such as film royalties and spending on research and development. ...

In an interview with the Financial Times, Brent Moulton, who manages the national accounts at the Bureau of Economic Analysis, said the update is the biggest since computer software was added to the accounts in 1999.

“We are carrying these major changes all the way back in time – which for us means to 1929 – so we are essentially rewriting economic history,” said Mr Moulton.

The changes will affect everything from the measured GDP of different US states to the stability of the inflation measure targeted by the US Federal Reserve. They will force economists to revisit policy debates about everything from corporate profits to the causes of economic growth. ...

The changes are in addition to a comprehensive revision of the national accounts that takes place every five years... Steve Landefeld, the BEA director, said it was hard to predict the overall outcome given the mixture of new methodology and data updates. ... But while the level of GDP may change,... “I wouldn’t be looking for large changes in trends or cycles,” said Mr Landefeld. ...

When working with macroeconomic data, we don't generally assume that there are large measurement errors in the data when assessing the significance of the results. Maybe we should.