posted on 30 January 2015
The advance estimate of fourth quarter 2014 Real Gross Domestic Product (GDP) is a positive 2.6%.
The market expected:
One must consider:
Real GDP Expressed As Year-over-Year Change
Real GDP is inflation adjusted and annualized - and Real GDP per capita has made an all time high.
Real GDP per Capita
The table below compares the 3Q2014 third estimate of GDP (Table 1.1.2) with the advance estimate 4Q2014 GDP which shows:
The arrows in the table below highlight significant differences between3Q2014 and 4Q2014 (green is good influence, and red is a negative influence).
[click on graphic below to enlarge]
What the BEA says about this advance estimate:
Inflation continues to moderate as the "deflator" which adjusts the current value GDP to a "real" comparable value continues to moderate. The following compares the GDP deflator to the Consumer Price Index:
Here is a look at GDP since Q2 1947 together with the real (inflation-adjusted) S&P Composite. The start date is when the BEA began reporting GDP on a quarterly basis. Prior to 1947, GDP was reported annually. To be more precise, what the lower half of the chart shows is the percent change from the preceding period in Real (inflation-adjusted) Gross Domestic Product. I've also included recessions, which are determined by the National Bureau of Economic Research (NBER).
Here is a close-up of GDP alone with a line to illustrate the 3.3 average (arithmetic mean) for the quarterly series since the 1947. I've also plotted the 10-year moving average, currently at 1.6 percent.
Here is the same chart with a linear regression that illustrates the gradual decline in GDP over this timeframe.
And for a bit of political trivia, here is a look at GDP by party in control of the White House and Congress.
In summary, the Q4 GDP Advance Estimate of 2.6 percent definitely disappointed the forecasts of mainstream economists.
Caveats on the Use of Gross Domestic Product (GDP)
GDP is market value of all final goods and services produced within the USA where money is used in the transaction - and it is expressed as an annualized number. GDP = private consumption + gross investment + government spending + (exports imports), or GDP = C + I + G + (X - M). GDP counts monetary expenditures. It is designed to count value added so that goods are not counted over and over as they move through the manufacture - wholesale - retail chain.
The vernacular relating to the different GDP releases:
Consider that GDP includes the costs of suing your neighbor or McDonald's for hot coffee spilled in your crotch, plastic surgery or cancer treatment, buying a new aircraft carrier for the military, or even the replacement of your house if it burns down - yet little of these activities is real economic growth.
GDP does not include include home costs (other than the new home purchase price even though mortgaged up the kazoo), interest rates, bank charges, or the money spent buying anything used.
It does not measure wealth, disposable income, or employment.
In short, GDP does not measure the change of the economic environment for Joe Sixpack in 1970, and Joe Sixpack's kid, yet pundits continuously compare GDP across time periods.
Although there always will be some correlation between all economic pulse points, GDP does not measure the economic elements that directly impact the quality of life of its citizens.
>>>>> Scroll down to view and make comments <<<<<<
Permanent link to most recent post on this topic
Econintersect Economic Releases
|.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet|
|Asia / Pacific|
|Middle East / Africa|
This Web Page by Steven Hansen ---- Copyright 2010 - 2017 Econintersect LLC - all rights reserved