Reconstruction puts 1937–1938 US GDP decline at 7.07 percent
US GDP fell 7.07 percent in 1937–1938, versus 10.50–10.62 percent in two published histories, according to Raphael Auer's Bank for International Settlements (BIS) paper. The comparison holds annual GDP fixed while testing alternative quarterly reconstructions.
Industrial production wins the test
Official US quarterly GDP begins in 1947.
Auer compares 58 specifications for reconstructing 1919–1946, ranking them on 64 concealed quarterly growth changes during 1947–1963.
Log industrial production with a constant response, Litterman residuals and proportional Denton allocation yields the lowest root mean squared error, 0.5633 percentage points.
Richer indicator panels, expenditure detail and flexible responses do not improve accuracy.
Its 1937–1938 decline is 7.07 percent, against 10.50 percent for Balke and Gordon (1986), 10.62 percent for Ramey and Zubairy (2018) and 6.77 percent for Gordon and Krenn (2010), at common annual GDP.
The paper does not establish statistically meaningful differences between the leading prediction scores.
Depth survives better than dates
Across specifications, the interquartile decline ranges are 30.9–31.6 percent for the Great Depression and 6.6–7.8 percent for 1937–1938; these are not confidence intervals.
The preferred reconstruction estimates declines of 31.14 percent in 1929–1933 and 15.86 percent in 1944–1946.
Its 99 percent coefficient interval for 1937–1938 is 6.34–7.96 percent; alternative estimation assumptions yield 7.07–7.58 percent declines.
It matches all six National Bureau of Economic Research recessions, but dates the first contraction two quarters earlier, from 1919Q3 to 1921Q1.
Precision is not certainty
Coefficient precision does not establish certainty about missing quarterly GDP.
The intervals exclude source revisions, model selection and unobserved quarterly disturbances.
Lower reconstructed volatility also reflects smoothing seen in postwar tests, not evidence by itself of greater prewar stability.