2018 Economic Calendar
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GDP  
Released On 4/27/2018 8:30:00 AM For Q1(a):18
PriorConsensusConsensus RangeActual
Real GDP - Q/Q change - SAAR2.9 %2.0 %1.3 % to 2.8 %2.3 %
GDP price index - Q/Q change - SAAR2.3 %2.4 %2.0 % to 2.5 %2.0 %
Real Consumer Spending – Q/Q change – SAAR4.0 %1.1 %0.7 % to 2.4 %1.1 %

Highlights
A sharp rise in service spending helped keep first-quarter GDP in the respectable range, at an annualized 2.3 percent rate and 3 tenths above Econoday's consensus. Service spending contributed nearly 1 full point to the result and offset a sharp decline in spending on durables. Consumer spending in total rose at a 1.1 percent pace, subdued but still positive.

Business spending also helped the quarter, contributing 8 tenths of a point with strength here including both structures and equipment. But residential investment, after spiking in the fourth quarter, couldn't pull its weight and contributed zero to the latest quarter.

Inventories, which had been too low relative to demand, are a welcome positive in the report, rising $33.1 billion and adding 4 tenths to the quarter. Imports are once again the biggest negative, subtracting 4 tenths in a quarter that marked the imposition of metal tariffs. But in more than an offset, exports rose 0.6 percent to make for a 6 tenths positive contribution from net exports. Government purchases are also a positive, adding 2 tenths.

Price readings are a negative surprise in the report, with the chain-weight GDP price index rising at only a 2.0 percent rate which is well short of expectations for 2.4 percent.

It was a moderate quarter for the economy especially for the consumer whose spirits waned a bit despite the big tax cut and continuing strength in the labor market. As for spending, given the moderate gains for services in February and January, the strength in this component in today's report implies a sharp gain for services in Monday's personal income & outlays report which will unbundle March's contributions to the quarter. Also note the decline in durable spending largely reflects the quarter's soft showing for vehicle sales which however did show promise going into April with the first indication on second-quarter consumer spending coming from next week's unit vehicle sales results.

Consensus Outlook
The first estimate for first-quarter GDP is expected to come in at a 2.0 percent annualized rate vs 2.9 percent in the fourth quarter. Residential and nonresidential investment as well as inventories look to be positives with net exports a negative. Consumer spending is expected to moderate to a 1.1 percent rate from the fourth quarter's very strong 4.0 percent. The GDP price index is seen inching higher to 2.4 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 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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