Econoday Report: Gross Domestic Product 30, 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 11/30/05 For Q3 Preliminary 2005

Real GDP, Q/Q change, SAAR
Actual	4.3%
Consensus	4.1%
Consensus Range	3.7% to 4.3%

GDP deflator, Q/Q change, SAAR
Actual	3.0%
Consensus	3.2%
Consensus Range	3.1% to 3.7%

Highlights
GDP was revised higher than expected in the third quarter, to an annual growth rate of 4.3% from an advanced reading of 3.8%. The revised reading is the strongest growth rate since first-quarter 2004. Growth was boosted by an upward revision to final sales, at 4.7% vs. an advanced 4.4%. Both residential housing and business investment were revised higher as was personal spending. On the negative side was an upward revision to the nation's trade gap reflecting a decrease in exports tied in part to September's hurricanes. The savings rate was also bad news, falling 1.5% from an advanced decline of 1.1%.

Price readings were headed by a very tame core deflator, at an annual increase of 1.2% and down 1 tenth from the advance report. The overall deflator, showing the pressures of energy prices, was up 3.0%, also down 1 tenth in the revision.

Bonds dipped slightly on the strong headline gain, but the dollar showed no reaction. Revisions to GDP rarely move markets but they do add to the economic outlook. In this case, economic growth proved solid and resilient in the face of hurricanes and spikes in energy prices -- perhaps a plus going into the holiday season.

Market Consensus Before Announcement
Initially, the Commerce Department estimate that real GDP expanded at a 3.8 percent rate in the third quarter of 2005 with healthy gains in consumption expenditures and investment spending. Since the advance report, the international trade figures have been released, and these were weaker than the Commerce Department had estimated when compiling advance GDP estimates. However, several other reports have been revised higher suggesting an upward revision.

Real GDP Consensus Forecast for Q3 05: 4.1 percent annual rate
Range: 3.7 to 4.3 percent annual rate

GDP deflator Consensus Forecast for Q3 05: 3.2 percent annual rate
Range: 3.1 to 3.7 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