Econoday Report: GDP December 22, 2009

2009 Economic Calendar

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GDP

Released on 12/22/2009 8:30:00 AM For Q3:09

	Prior	Consensus	Consensus Range	Actual
Real GDP - Q/Q change - SAAR	2.8 %	2.7 %	2.5 % to 2.9 %	2.2 %
GDP price index - Q/Q change - SAAR	0.5 %	0.5 %	0.5 % to 0.5 %	0.4 %

Highlights
The recovery is not as strong as earlier believed. Real GDP growth for the third quarter was revised downward to an annualized 2.2 percent from the prior estimate of 2.8 percent. The market consensus had expected a 2.7 percent gain for the latest estimate. The revisions were primarily due to lower estimates for inventories. Also revised lower were government purchases, nonresidential fixed investment, residential fixed investment, and personal consumption. Net exports were revised up. Final sales were revised down to 1.5 percent from an annualized 1.9 percent.

Year-on-year, real GDP stood at minus 2.6 percent compared to minus 3.8 percent in the second quarter.

On the inflation front, the GDPI price index was bumped down to a 0.4 percent annualized pace from last month's estimate of 0.5 percent and compared to the market forecast of 0.5 percent.

The numbers are a little old at this point but forward momentum was not as strong as earlier believed. The report likely will be negative on equities in thinly traded markets.

Market Consensus Before Announcement
The recovery is not as strong as earlier believed. Real GDP growth for the third quarter was revised downward to an annualized 2.2 percent from the prior estimate of 2.8 percent. The market consensus had expected a 2.7 percent gain for the latest estimate. The revisions were primarily due to lower estimates for inventories. Also revised lower were government purchases, nonresidential fixed investment, residential fixed investment, and personal consumption. Net exports were revised up. Final sales were revised down to 1.5 percent from an annualized 1.9 percent.

Year-on-year, real GDP stood at minus 2.6 percent compared to minus 3.8 percent in the second quarter.

On the inflation front, the GDPI price index was bumped down to a 0.4 percent annualized pace from last month's estimate of 0.5 percent and compared to the market forecast of 0.5 percent.

The numbers are a little old at this point but forward momentum was not as strong as earlier believed. The report likely will be negative on equities in thinly traded markets.

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

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

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

2009 Release Schedule

Released On: 1/30 2/27 3/26 4/29 5/29 6/25 7/31 8/27 9/30 10/29 11/24 12/22

Released For: Q4:08 Q4:08 Q4:08 Q1:09 Q1:09 Q1:09 Q2:09 Q2:09 Q2:09 Q3:09 Q3:09 Q3:09

A: Advance P: Preliminary F: Final