TreasureX Researchbis.wpRebuilding America's Pre-1947 GDP, With Error Bars
Raphael Auer · November 3, 2026
Official quarterly US GDP data only starts in 1947, so anyone studying earlier business cycles — the Roaring Twenties, the Great Depression, the wartime boom — has to stitch quarterly numbers together from annual totals and historical indicators like industrial output or rail freight. Different researchers have used different recipes, and nobody had systematically checked how much the resulting quarterly paths disagree.
This BIS working paper by Raphael Auer compares the main reconstruction methods used for 1919–1946. The clever part is the test: each method is asked to predict quarters it never saw (postwar data that is officially measured), and the errors are split into two sources — disagreement between competing specifications, and statistical uncertainty inside any single model.
Why it matters: economic history feeds directly into modern debates about how deep recessions really were, how fast recoveries happen, and how much volatility markets historically carried. If prewar quarterly GDP carries wide error bands, then claims built on it — about depression dynamics, policy lessons, or long-run risk — deserve more caution. For investors, the takeaway is a reminder that long-horizon return and volatility studies leaning on reconstructed macro data inherit that uncertainty; the further back you look, the fuzzier the picture, and the more careful you should be about treating any single historical estimate as fact.
Source: Bank for International Settlements — https://www.bis.org/publications/working-paper-1390-prewar-us-business-cycles-under-uncertainty-reconstructing-quarterly-gdp-1947
Educational content only, generated with AI assistance from public research abstracts. Not investment advice.