Menzie Chinn's take on the GDP revisions:
Econbrowser: Tales from GDP revisions: [In the previous unrevised data,]GDP fell at a 7% SAAR rate in 2008Q4 (the quarter that Don Luskin conjectured in September 2008 might be the start of unprecedented prosperity); in the revised figures, the decline was 9.3%…. As an interesting aside, the advance estimate (released at the end of January 2009) for 2008Q4 growth was only -4.1%…. The 2008Q4 q/q ar change is now only rivaled by the 1958Q1 q/q change (-11.1%).
The increase in GDP relative to 2009Q1 (when the ARRA was passed) is the same as before…. In other words, the revisions do not alter the estimated growth trajectory of the economy. If one considers the effect of the stimulus as relative to where the economy started (recalling the ARRA only really started kicking in in 2009Q2), then one’s views should not be altered…. On the other hand, it is even more clear now that the size of the stimulus was wholly inadequate…. The output gap is more negative than originally estimated (based on January 2011 CBO estimate of potential), and is now getting more negative…. [T]he implied output gap, at -6.9% in 2011Q1 versus the previously implied -5.3%, is daunting…. [T]he output gap is widening, as fiscal stimulus is withdrawn, and the economy continues to encounter headwinds from high energy costs, faltering foreign demand for US goods, and uncertainty regarding future demand and fiscal policy.
It strikes me that this seems an odd time to embark upon fiscal consolidation that is front-loaded -- i.e., has cutbacks in current or near-horizon spending….
The revisions have some implications for Okun’s law…. [T]he mystery is not why current (post-recession) employment growth is so slow (given GDP growth), but rather why it was so low at the end of the recession (09Q1, 09Q2)…. [T]here was no underprediction of employment growth subsequent to the recession (as one might have expected on the basis of past experience, particularly after the 1990-91 recession)…