2018 Economic Calendar
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GDP  
Released On 3/28/2018 8:30:00 AM For Q4(f):2017
PriorConsensusConsensus RangeActual
Real GDP - Q/Q change - SAAR2.5 %2.7 %2.4 % to 3.0 %2.9 %
GDP price index - Q/Q change - SAAR2.3 %2.3 %1.6 % to 2.3 %2.3 %
Real Consumer Spending - Q/Q change - SAAR3.8 %3.8 %3.7 % to 4.1 %4.0 %

Highlights
Fourth-quarter GDP is revised 4 tenths higher in the third estimate to a 2.9 percent annualized rate that beats Econoday's consensus by 2 tenths. Consumer spending gets a 2 tenth upgrade to a 4.0 percent rate as spending on services is revised 2 tenths higher to 2.3 percent with nondurable spending getting a 5 tenths upgrade to 4.8 percent. Spending on durables is revised 1 tenth lower to a still very strong 13.7 percent that reflected hurricane-replacement for autos and which pulled vehicle sales out of the ongoing quarter. Contribution from consumer spending to the fourth quarter's total growth rate was 2.8 percentage points, almost the entire GDP rate.

Nonresidential fixed investment is upgraded 2 tenths to a very solid 6.8 percent rate and contributing 0.8 points to the quarter that, unlike consumer spending, may be extending that strength into this quarter based on last week's durable goods report. Residential investment, which appears shaky so far this quarter, is revised 2 tenths lower to 12.8 percent for a contribution of 0.5 points. Slowing in inventory growth held down growth slightly less than in the second estimate, at minus 0.5 points, with the drag from net exports revised fractionally higher, now at minus 1.2 percentage points. Government purchases are revised slightly higher to 3.0 percent which contributed 0.5 points to the quarter.

The fourth quarter was very solid and actually understated given the strength of consumer spending. Excluding both inventories and exports, GDP rose 4.5 percent which is also 2 tenths higher than the second estimate. For the ongoing first quarter, consumer spending, or the lack of it, is the question. Watch tomorrow for new GDP inputs with the personal income and outlays report for February.

Consensus Outlook
Boosted by smaller drag from inventories, the third estimate for fourth-quarter GDP is expected to come in at a 2.7 percent annualized rate vs 2.5 percent in the second estimate. The consumer was the driver in the fourth quarter and no change is expected, with consumer spending seen at a 3.8 percent rate. The GDP price index is seen unchanged at a 2.3 percent rate.

Definition
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
 
[Chart]
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
 
[Chart]
It is common to compare quarterly change at annualized rates in the GDP deflator. But these changes can be volatile and mask the trend which, just like the quarterly swings in GDP, is sometimes more visible in year- on-year change.
Data Source: Haver Analytics
 
 

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