2012 Economic Calendar
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Released On 10/26/2012 8:30:00 AM For Q3(a):2012
PriorConsensusConsensus RangeActual
Real GDP - Q/Q change - SAAR1.3 %1.9 %1.0 % to 3.9 %2.0 %
GDP price index - Q/Q change - SAAR1.6 %2.0 %1.4 % to 2.7 %2.8 %

At 2.0 percent, growth in third-quarter GDP came in fractionally higher than expected and well above second-quarter growth of 1.3 percent. Still, 2.0 percent isn't gangbusters.

But the quarter is led by final demand which is a positive indication for momentum going into the fourth quarter. Final sales of domestic product rose 2.1 percent which marks an acceleration from 1.7 percent in the second quarter. An alternate reading that excludes net exports is even stronger with final sales to domestic producers up 2.3 percent vs the prior quarter's 1.4 percent.

Personal consumption picked up in the quarter, led by consumer buying of durable goods which hints at consumer optimism to make large purchases. Business spending was flat.

A surprise positive in the quarter is a strong contribution from government spending led by Federal spending and specifically defense spending. Exports, as indicated by the special strength in the final sales reading that excludes exports, was a drag on the quarter and reflects weakness in global markets that's centered in Europe and includes Asia.

Inflation hawks have something to read in this report with the GDP price index, at 2.8 percent, coming in above high-end expectations. But when excluding food and energy, pressure slows to 1.3 percent from the second quarter's 1.7 percent.

There's not much reaction in the markets to today's report which does not improve the outlook for employment growth. Still, there are some positives in this report which underscore the economy's resilience and specifically the consumer's resilience.

Consensus Outlook
GDP growth was unexpectedly revised down for the second quarter. The Commerce Department estimated growth at a mere 1.3 percent annualized pace, compared to the second estimate of 1.7 percent and advance estimate of 1.5 percent. The latest number was sharply slower than the 2.0 percent seen in the first quarter and especially the 4.1 percent boost posted for the fourth quarter of last year.

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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