2010 Economic Calendar
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Released On 2/26/2010 8:30:00 AM For Q4(p):2009
PriorConsensusConsensus RangeActual
Real GDP - Q/Q change - SAAR5.7 %5.7 %5.4 % to 6.0 %5.9 %
GDP price index - Q/Q change - SAAR0.6 %0.6 %0.6 % to 0.7 %0.4 %

Fourth quarter real GDP was revised up but the details indicate that the revisions were not for the good. Real GDP growth for the fourth quarter was revised upward to an annualized 5.9 percent from the initial estimate of 5.7 percent. The market forecast was for a net unrevised second estimate. The higher estimate reflected more positive contributions from private inventory investment, exports, personal consumption expenditures (PCE), and nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased. But overall strength for the quarter increasingly was in the inventory component as businesses slowed the pace of destocking. Final sales growth was revised to a more modest 1.9 percent increase from the original estimate of 2.2 percent. Nonetheless, the fourth quarter GDP advance is the second in a row.

The change in real private inventories added 3.9 percentage points to fourth quarter GDP, compared to 3.4 percentage points in the initial estimate. Business inventories fell a modest $16.9 billion, following a sharp $139.2 billion plunge in the third quarter.

Within final sales, there was some strength in investment in equipment & software, posting an 18.2 percent jump, while residential investment advanced 5.0 percent. PCEs rose 1.7 percent in the latest period. Net exports shrank by $10.3 billion with exports spiking 22.4 percent and imports gaining 15.3 percent annualized. Nonresidential structures fell 13.9 percent.

Year-on-year, real GDP improved to up 0.1 percent from minus 2.6 percent in the third quarter.

On the inflation front, the GDP price index was revised down to a 0.4 percent rise, compared to the original estimate of an annualized 0.6 percent. Analysts expected no net revision to the initial GDP price inflation number.

Markets should focus on the downward revision to final sales and this should weigh on equities and help interest rates ease.

Consensus Outlook
GDP for the fourth quarter initial estimate showed the economy growing an annualized 5.7 percent. This was the strongest growth rate in more than six years. The fourth quarter gain primarily reflected a slowing in the pace of inventory destocking, a deceleration in imports and an upturn in nonresidential fixed investment. These were partly offset by deceleration in federal government spending and in PCE growth. The bottom line is that overall demand was not as strong as production. Real final sales of domestic product - GDP less change in private inventories - increased 2.2 percent in the fourth quarter, compared with an increase of 1.5 percent in the third. The GDP price index edged up an annualized 0.6 percent after a 0.4 percent rise in the third quarter. Analysts are expecting no net revision to real GDP growth. Components that could tip the balance on revisions are a bigger-than-expected monthly trade gap for December and upward revisions to retail sales.

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
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

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