The discrepancy between expenditure- and income-side estimates of US output

Abstract

The United States has two measures of economic output: gross domestic product (GDP) and gross domestic income (GDI). While these are conceptually equivalent, their initial estimates differ because these initial estimates are computed from different and incomplete data sources. I study the difference, or “statistical discrepancy,” between GDP and GDI in percent and document three features. First, its size does not materially shrink on average as more data become available. Second, the size of the initial discrepancy in absolute value does not predict the size of the discrepancy in absolute value after revisions. Third, the initial discrepancy has some predictive information about revisions to lagged GDP growth but no predictive information about revisions to lagged GDI growth.