Econoday Report: Gross Domestic Product 30, 2005

2005 U.S. Economic Events & Analysis

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Gross Domestic Product

Definition
Gross Domestic Product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. Why Investors Care

Released on 3/30/05 For Q4 Final 2004

Real GDP, Q/Q change, SAAR
Actual	3.8%
Consensus	4.0%
Consensus Range	3.8% to 4.1%

GDP deflator, Q/Q change, SAAR
Actual	2.3%
Consensus	2.1%
Consensus Range	2.1% to 2.3%

Highlights
Fourth-quarter GDP rose an unrevised 3.8% according to the final numbers. Final sales were revised 2 tenths higher to 3.4%, a bit of good news pointing to greater demand going into the first quarter.

Price readings were moved up a notch or two, in a bit of bad news on the already sensitive price front. The GDP deflator was revised 2 tenths higher to 2.3%.

Other readings showed little change: non-residential investment rose sharply, inventories added to growth, and exports subtracted from growth.

Bonds dipped back a bit in initial reaction to the report, likely due to the inflation readings. Otherwise, the report is likely to be quickly shelved. First-quarter GDP growth will be the new talk, with some estimates as high as 4%.

Market Consensus Before Announcement
The final revision on fourth-quarter GDP figures will be reported. Usually, the final estimates are revised very little from the preliminary figures. Last month, The Bureau of Economic Analysis estimated that real GDP grew at a 3.8 percent rate and the GDP deflator increased at a 2.1 percent rate. This month's report will have corporate profits figures as well.

Real GDP Consensus Forecast for Q4 04: 4 percent rate
Range: 3.8 to 4.1 percent rate

GDP deflator Consensus Forecast for Q4 04: 2.1 percent rate
Range: 2.1 to 2.3 percent rate

Trends

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.

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

2005 Release Schedule

Released On: 1/28 2/25 3/30 4/28 5/26 6/29 7/29 8/31 9/29 10/28 11/30 12/21

Released For: Q4a Q4p Q4f Q1a Q1p Q1f Q2a Q2p Q2f Q3a Q3p Q3f