2018 Economic Calendar
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GDP  
Released On 6/28/2018 8:30:00 AM For Q1(f):2018
PriorConsensusConsensus RangeActual
Real GDP - Q/Q change - SAAR2.2 %2.2 %2.0 % to 2.4 %2.0 %
GDP price index - Q/Q change - SAAR1.9 %1.9 %1.9 % to 1.9 %2.2 %
Real Consumer Spending – Q/Q change – SAAR1.0 %1.0 %0.7 % to 1.1 %0.9 %

Highlights
Inflation was a little bit warmer than thought in the first quarter, a factor that deflates the third estimate of first-quarter GDP more than expected which came in at a 2.0 percent annualized rate to just make the low end of Econoday's consensus range. The GDP price index is now at 2.2 percent which is well above Econoday's consensus range which was fixed at 1.9 percent. The GDP core, however, remains unchanged in the third estimate at 2.6 percent.

Turning to components, the third estimate erases what were small contributions from inventory growth and net exports, each turning fractionally negative. Contributions from consumer spending, now at a 0.9 percent annualized rate of growth, are also shaved slightly while those from nonresidential fixed investment, at a very strong showing of 10.4 percent, and residential investment at minus 1.1 percent are also revised higher. The contribution from government purchases is also upgraded slightly, now at 1.3 percent.

The first quarter was yet another strong one for business, with related investment perhaps getting a boost from this year's corporate tax cut. But it was a soft one for the consumer as spending sputtered and residential investment, though revised higher in today's report, still in reverse. And inflation also made a greater-than-expected appearance in the quarter which may, given oil prices, tariff risks as well as tight conditions in the labor market, become a theme in the coming quarters as well. But for growth, the early outlook for the second quarter is extremely positive with forecasts ranging from roughly 3 to 5 percent.

Consensus Outlook
The third estimate for first-quarter GDP is expected to come in at a 2.2 percent annualized rate, unchanged from the second estimate. Consumer spending is also expected to come in unchanged, at a 1.0 percent rate. The GDP price index is likewise seen unchanged at 1.9 percent.

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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