The downward revision was larger than expected, and may call into question the validity and usefulness of future estimates from the BEA. As I note in the post at The Corner:
However, this was revised downward from the November preliminary estimate of 2.8 percent. And this was revised downward from its “advanced” estimate of 3.5 percent. In other words, the best estimate of the change in output shaved more than a whole percentage point off the preliminary forecasts. That’s a big hit in terms of forecasting error, and it may well bring into question the reliability of future forecasts and estimates from the BEA. This may unfortunately fuel speculation in some quarters that the agency is no longer acting independently and is rigging at least the preliminary forecast numbers to favor the administration.
As a result, much of the growth that occurred was due to the increase in consumer expenditures that resulted from the Cash 4 Clunkers program, which really just advanced spending and didn’t spur meaningful investment. Thus, there very well may not have been any real growth in the third quarter; the growth numbers may well be a statistical mirage.
My colleague Anthony Randazzo’s post on the “effectiveness” of the Cash 4 Clunkers program are worth another read in this context.