What that GDP report really meant (not much)

As you've probably heard, the U.S. economy grew at a 1.6% annual, inflation-adjusted crawl in the quarter that ended Sept. 30.

Except that, well, it probably didn't. It was the "advance" estimate of gross domestic product that the Commerce Department's Bureau of Economic Analysis released today. On Nov. 29 we'll get the "preliminary" estimate and then, on Dec. 21, the "final" one. Only that won't be final, either, because in 2008 the BEA's once-every-half-decade revision of the National Income and Product Accounts will change all the numbers yet again.

All this uncertainty and revision comes because GDP numbers are built upon vast edifices of educated guesswork that only get filled in with real data months and years down the road--and even then there remain big questions about what we count and how we count it.

So why exactly do we pay attention to these numbers? In part because a lot of people are grasping for any sign whatsoever as to whether the slumping housing market is going to take down the rest of the economy.

For NYU economics professor Nouriel Roubini, who has been the most noteworthy, outspoken, and (so far) correct bear among economic forecasters over the past year, today's GDP release was occasion to gloat a little. Recession, he predicts, is just around the corner.

For most of the forecasters on Wall Street, who as a group are of the opinion that the economy has so much strength outside of housing that we'll muddle through without an outright downturn, the report has occasioned a few downward adjustments to forecasts and a lot of statements that we will nonetheless muddle through without an outright downturn.

Who's right? I have no idea. What I'm almost certain of, though, is that the economy did not in fact grow at a 1.6% pace in the third quarter.