With some projections showing less than 1% GDP growth in the December quarter, a larger than normal change in trade or inventory could generate negative growth for the quarter.
Guy LeBas: Janney/U.S. Census Dept.The Federal Reserve Bank of Atlanta latest GDPNow estimate for the December quarter’s GDP growth
. While the Blue Chip consensus is running higher than the GDPNow estimate, the consensus is showing a lower rate of growth than even the September quarter’s 1.9%.Blue Chip Economic Indicators, Blue Chip Financial Forecasts and Atlanta Federal Reserve BankNew York Fed GDP NowcastChicago Fed National Activity Index fell in Octoberor CFNAI is a monthly index designed to gauge overall economic activity and related inflationary pressure.
The GDP calculation is based on quarter-to-quarter changes in the economy. Since one quarter’s change in any category is multiplied by four to obtain a yearly estimate, a larger-than-normal movement in just one of them can create an outlier result. This may result in an inaccurate longer-term reading of the economy but creates headlines.
If the trade balance becomes worse due to companies importing goods to beat increased tariffs, such as the ones planned to go into place on December 15, or companies decide to decrease their inventory levels due to concerns about the economy, the resulting multiplication effect could subtract 0.5% or even more than 1% from the total GDP calculation. This could result in GDP growth showing a contraction for the quarter.
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