2018 Economic Calendar
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GDP  
Released On 5/30/2018 8:30:00 AM For Q1(p):2018
PriorConsensusConsensus RangeActual
Real GDP - Q/Q change - SAAR2.3 %2.2 %2.1 % to 2.6 %2.2 %
GDP price index - Q/Q change - SAAR2.0 %2.0 %2.0 % to 2.0 %1.9 %
Real Consumer Spending – Q/Q change – SAAR1.1 %1.2 %1.0 % to 1.2 %1.0 %

Highlights
A lot of jostling in the components isn't apparent in the headline which, at 2.2 percent annualized growth, hits Econoday's second-estimate consensus for first quarter GDP. Nonresidential investment gets a 3.1 percentage point upgrade to a 9.2 percent annualized rate while investment on the residential side gets a 2 point downgrade to a minus 2.0 percent rate.

Inventories increased by $20.2 billion in the quarter, down from $33.1 billion in the first estimate, while net exports totaled minus $650.9 billion vs an initial $645.9 billion. The revisions trim the contribution from inventories to plus 0.13 from an initial plus 0.43 with net exports trimmed to plus 0.08 from plus 0.20.

Consumer spending was downgraded only by 1 tenth, rising at a 1.0 percent rate and reflecting a 3 tenths downward revision to service spending which is at plus 1.8 percent in the second estimate. Government purchases are also downgraded by 1 tenth to plus 1.1 percent.

The upgrade for nonresidential investment reflects greater gains for structures and intellectual property along with equipment which however is lagging the other components. The decline for residential investment underscores what has been and continues to be uneven results for building and home sales.

All in all, it was a strong quarter for business, with investment perhaps getting a boost from this year's corporate tax cut, and a soft one for the consumer as spending sputtered and residential investment went into reverse. But the early outlook for the second quarter is positive with most forecasts calling for a return to the 3 percent area.

Consensus Outlook
The second estimate for first-quarter GDP is expected to come in at a 2.2 percent annualized rate vs 2.3 percent in the first estimate. The contribution from inventory growth may be pulled back offset by a possible upgrade to consumer spending where expectations are looking for a 1.2 percent rate vs the first estimate's 1.1 percent rate. The GDP price index is seen unchanged at a 2.0 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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