Gross Domestic Product
Gross Domestic Product (GDP) is the broadest measure of aggregate
economic activity and encompasses every sector of the economy. Why Investors Care
Q3 Advance 2007
Real GDP - Q/Q change - SAAR
GDP price index - Q/Q change - SAAR
came in at an annualized 3.8 percent for the second quarter - a fairly
robust number. Strength was generally widespread outside of residential
investment. But the subprime mess and worse-than-expected housing have
been damping the consumer sector along with manufacturing. On the
positive side, business investment and exports are likely to keep
growth moderately positive for the quarter. But with subprime lending
problems now creeping into the overall economy somewhat, third quarter
GDP numbers are not as relevant as they would be otherwise. On the
inflation front, the GDP price index rose 2.6 percent annualized in the
second quarter, following a 4.2 percent jump in the first quarter.
Real GDP Consensus Forecast for advance Q3 07: +3.2 percent annual rate
Range: +2.5 to +4.0 percent annual rate
GDP price index Consensus Forecast for advance Q3 07: +2.0 percent annual rate
Range: +0.8 to +2.3 percent annual rate
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