2012 Economic Calendar
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Released On 2/29/2012 8:30:00 AM For Q4(p):2011
PriorConsensusConsensus RangeActual
Real GDP - Q/Q change - SAAR2.8 %2.8 %2.6 % to 3.1 %3.0 %
GDP price index - Q/Q change - SAAR0.4 %0.4 %0.3 % to 0.5 %0.9 %
GDP - $ level15.294 thous billion $

GDP growth broke the psychological 3 handle. The Commerce Department revised fourth quarter GDP growth up to 3.0 percent from the initial estimate of 2.8 percent. Analysts had projected the second estimate to come in unrevised at 2.8 percent for the overall number. The latest figure compares to a modest 1.8 percent rise in the third quarter.

The upward revision to the percent change in real GDP primarily reflected an upward revision to nonresidential fixed investment, a downward revision to imports, and an upward revision to personal consumption expenditures (PCEs).

Demand numbers were nudged higher. Final sales of domestic product increased an annualized 1.1 percent, compared to the initial estimate of 0.8 percent for the fourth quarter. Final sales to domestic purchasers (excludes net exports) rose a revised 1.1 percent, compared to the advance estimate of 0.9 percent. Both series were significantly slower than in the third quarter.

Separate from the direction of revisions, the acceleration in real GDP in the fourth quarter primarily reflected an upturn in private inventory investment and accelerations in PCE and in residential fixed investment that were partly offset by a deceleration in nonresidential fixed investment, a downturn in federal government spending, an acceleration in imports, and a larger decrease in state and local government spending..

On a year-ago basis, GDP was up 1.6 percent, compared to 1.5 percent in the third quarter.

Economy-wide inflation according to the GDP price index was bumped up to 0.9 from the near flat initial estimate of 0.4 percent annualized. Analysts had called for a 0.4 percent rise. The latest is a notable deceleration from 2.6 percent in the third quarter.

The composition of GDP is somewhat improved from the initial estimate but inventory growth was the main driver of fourth quarter growth. Tomorrow's personal income report will be important to see how PCEs do for January and the start of Q1.

On the news, equity futures rose slightly.

Consensus Outlook
GDP growth in advance estimate for the fourth quarter rose to 2.8 percent from 1.8 percent in the third quarter. However, the component mix was not favorable. Inventory growth accelerated moderately and added 1.94 percentage points to overall growth. This was not a dramatic rise in inventories and they even appear to be about as wanted by businesses. But the bulk of GDP growth came from inventories instead of other components. Demand numbers decelerated as final sales of domestic product increased an annualized 0.8 percent in the fourth quarter after a 3.2 percent rise in the third. Final sales to domestic purchasers (excludes net exports) advanced 0.9 percent, following a 2.7 percent gain in the second quarter. Economy-wide inflation according to the GDP price index eased sharply to 0.4 percent annualized from 2.6 percent in the third quarter.

Gross Domestic Product represents the total value of the country's production during the period and consists of the purchases of domestically-produced goods and services by individuals, businesses, foreigners and government entities. Data are available in nominal and real (inflation-adjusted) dollars, as well as in index form. Economists and market players always monitor the real growth rates generated by the GDP quantity index or the real dollar value. The quantity index measures inflation-adjusted activity, but we are more accustomed to looking at dollar values.

Household purchases are counted in personal consumption expenditures -- durable goods (such as furniture and cars), nondurable goods (such as clothing and food) and services (such as banking, education and transportation). Private housing purchases are classified as residential investment. Businesses invest in nonresidential structures, durable equipment and computer software. Inventories at all stages of production are counted as investment. Only inventory changes, not levels, are added to GDP.

Net exports equal the sum of exports less imports. Exports are the purchases by foreigners of goods and services produced in the United States. Imports represent domestic purchases of foreign-produced goods and services and must be deducted from the calculation of GDP. Government purchases of goods and services are the compensation of government employees and purchases from businesses and abroad. Data show the portion attributed to consumption and investment. Government outlays for transfer payments or interest payments are not included in GDP.

The GDP price index is a comprehensive indicator of inflation. It is typically lower than the consumer price index because investment goods (which are in the GDP price index but not the CPI) tend to have lower rates of inflation than consumer goods and services. Note that contributions of each component, as averaged over the prior year, are tracked in the table below (components do not exactly sum to total due to chain-weighted methodology). Consumption expenditures, otherwise known as consumer spending, has over history been steadily making up an increasing share of GDP.  Why Investors Care
Real GDP growth is always quoted at a quarterly annual rate. It measures how much the economy has grown over a three-month period. Quarterly growth rates are often volatile; consequently, economists also like to look at the year-over-year growth in GDP. The yearly changes tend to be more stable.
Data Source: Haver Analytics
It is common to compare quarterly changes at annual rates in the GDP deflator. These can be volatile, just like the quarterly swings in real GDP growth; as a result, the trend in inflation is better determined by year- over- year changes.
Data Source: Haver Analytics

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