U.S. fourth quarter GDP preview

Today, U.S. 4th quarter GDP figure will be released at 13:30 GMT.

This is the first flash reading of the fourth quarter GDP of the United States.  This would be a very vital piece of an economic docket to assess the health of the economy. This will be an indicator to see how the US economy is fairing especially with some recent signs of a slowdown.  

Past trends –

• U.S. GDP picked up pace since 2013 and increased pace in 2014. However, after rising 5 percentage and 2.2 percentage in the previous two quarters, U.S. GDP shrank by -0.2 percentage in the first quarter of 2015. Historically speaking the U.S. economy usually falters in the first quarter.
• The second quarter was relatively better, with GDP growing at 2.1 percentage in the second quarter from the first, only to slow down in the third quarter, with GDP growing about 1.3 percentage.
• Final quarter GDP was much better than expected at 1.4 percentage, still meager compared to 2014.
• GDP grew by 1.1 percent in the first quarter of 2016 and the second quarter GDP grew by 1.4 percent and finished the year with 3.5 percent and 2.1 percent growth in the third and fourth quarter.
• In the first two quarters of 2017, GDP grew by 1.4 percent and by 3.1 percent. GDP grew by 3.2 percent in the third quarter.
• The growth has really picked up since 2018. See chart for details

Expectation today –

• GDP is expected at 2.3 percent y/y, much lower than the 3.4 percent in the last quarter.
• According to the latest calculations, Atlanta Fed’s ‘GDP Now’ model is 1.8 percent growth for the fourth quarter.

Market impact –

If the actual number comes in line with the expectations, it would signal that the economy is showing signs of a slowdown heading into 2019, after stellar growth in late 2017, and early 2018.

The dollar index is currently trading at 95.89, down 0.22 percent for the day, so far. The selloff is likely to gain pace should the GDP disappoints significantly to the downside.