Gross Domestic Product

No Evidence of Manipulation in First Quarter 1991 Estimates Gao ID: GGD-93-58 March 10, 1993

Press reports alleged that the Department of Commerce inflated the first quarter 1991 gross domestic product (GDP) to mask the true dimensions of the economic downturn. GAO, however, found no evidence that the Bureau of Economic Analysis manipulated first quarter 1991 personal income or GDP for political purposes. GAO does make several suggestions for improving the perceived integrity of the Bureau's data. For example, GAO believes that the Bureau could more completely document and explain its data. Additionally, the Bureau has issued no public response to the press allegations. To determine user needs and to assure Congress and the public of the integrity and credibility of its data, the Bureau also needs to increase outside expert review and comment on its procedures. Congress may want to request that the Bureau testify regularly when it releases major national economic statistics.

GAO found that: (1) there was no evidence that BEA manipulated first quarter 1991 gross domestic product (GDP) or personal income statistics for political purposes; (2) BEA followed its standards in incorporating employment data in personal income statistics and deviated from its standards only when required by reasonable technical judgments; (2) BEA had many procedural and organizational safeguards that helped ensure the integrity of BEA data against political manipulation; (3) BEA based its 1991 personal income estimates on employment data rather than on GDP data, which resulted in a downward revision in employment data, and a net first quarter growth in GDP; (4) the estimated growth in state personal income for the first quarter of 1991 was less affected by revised employment data because BEA used employment and related wage data in different ways and at different times in state personal income estimates; and (5) improvements to BEA data integrity included increased documentation and explanation of its data and procedures, public responses to misconduct allegations, and mechanisms for outside expert reviews and comment on its procedures.

Recommendations

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