Econoday Report: Gross Domestic Product 29, 2005

2008 Economic Calendar
POWERED BY
Resource Center » U.S. & Intl Recaps \| Release Dates \| Why Investors Care \| Today's Calendar

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 9/29/05 For Q2 Final 2005

Real GDP, Q/Q change, SAAR
Actual	3.3%
Consensus	3.3%
Consensus Range	3.0% to 3.4%

GDP deflator, Q/Q change, SAAR
Actual	2.6%
Consensus	2.4%
Consensus Range	2.4% to 2.4%

Highlights
Final second-quarter GDP was unrevised at an annual growth rate of 3.3% but, in an important plus, final sales were revised higher by two tenths to an even stronger rise of 5.6%. The gain in final sales, the strongest in nearly two years, reflects upward revisions to electricity and telephone spending.

Inventories were an even bigger negative in the final reading, cutting 2.14 percentage points from growth. The mix of strong sales and thin inventories, which suggests that new demand will have to be met by new production and hopefully new employment, is a strong positive for the economic outlook going into the hurricane-marred third quarter.

Price readings were revised slightly higher but remain very tame. The core PCE index was revised one tenth higher to 1.7%, reflecting higher bank fees and higher home prices.

The data are old of course and won't have any significant impact on financial prices. But the report confirms that economic conditions in the quarter -- strong demand, lean inventories, and stable prices -- were unusually solid.

Market Consensus Before Announcement
According to the preliminary estimate compiled by the Bureau of Economic Analysis, real GDP expanded at a 3.3 percent rate in the second quarter of 2005. Consumer spending moderated slightly from the previous quarter's pace, but business fixed investment grew at a faster rate. However, the rate of inventory accumulation declined sharply in the second quarter, depressing overall growth.

Real GDP Consensus Forecast for Q2 05: 3.3 percent annual rate
Range: 3.0 to 3.4 percent annual rate

GDP deflator Consensus Forecast for Q2 05: 2.4 percent annual rate
Range: 2.4 to 2.4 percent annual 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