- Importance (A-F): This release merits a B.
- Source: Bureau of Economic Analysis, U.S. Department of Commerce.
- Release Time: Third or fourth week of the month at 8:30 ET for the
prior quarter, with subsequent revisions released in the second and third months
of the quarter.
- Raw Data available at: www.bea.doc.gov
Gross Domestic Product (GDP) is the the broadest measure of economic
activity. Annualized quarterly percent changes in GDP reflect the growth rate of
total economic output. The figures can be quite volatile from quarter to
quarter. Inventory and net export swings in particular can produce significant
volatility in GDP. The final sales figure, which excludes inventories, can
sometimes be helpful in identifying underlying growth trends as inventories
represent unsold goods, and a large inventory increase will boost GDP but might
be indicative of weakness rather than strength. The broad components of GDP are:
consumption, investment, net exports, government purchases, and inventories.
Consumption is by far the largest component, totalling roughly 2/3rds of
In addition to the GDP figures, there are GDP deflators, which measure the
change in prices in total GDP and for each component. Though the consumer price
index is a more closely watched inflation indicator, the GDP deflator is another
key inflation measure. Unlike CPI, it has the advantage of not being a fixed
basket of goods and services, so that changes in consumption patterns or the
introduction of new goods and services will be reflected in the deflator.
With both GDP and the deflator, the market tends to focus on the
quarter/quarter change. Year/year changes are also cited frequently, though they
do not provide the most timely indications of economic activity or inflation.
The bond market often reacts to GDP, though the price moves are typically small,
as much of the GDP data is easily predicted using monthly economic releases such
as personal consumption, durable goods shipments, construction spending,
international trade, and inventories.
Quarterly GDP reports are broken down into three announcements: advance,
preliminary, and final. After the final revision, GDP is not revised again until
the annual benchmark revisions each July. These revisions can be quite large and
usually affect the past five years of data.