U.S. second quarter GDP preview

Today, U.S. second quarter flash GDP figure will be released at 12:30 GMT.

This is the second flash reading of second quarter GDP of the United States. This would be a very vital piece of an economic docket to assess the health of the economy. There have been concerns have surfaced that the economy could face recession in the next 12 months as several data points to weakness.

This will also be an indicator to see how the US economy is fairing under the Trump administration which reportedly reducing regulations and set to propose tax cuts and infrastructure spending. However, the shortfall in those promises likely to hit both sentiment and growth.

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 previous two-quarters, U.S. GDP shrank by -0.2 percentage in the first quarter of 2015. Historically speaking 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.
• Growth has slowed further 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.
• According to the first flash estimate, GDP grew by 2.6 percent annualized rate in the second quarter.

Expectation today –

• It is expected on the upper side today. According to median estimate, the economy is expected to grow by 2.7 percent in the second quarter.

Market impact –

If the actual number comes in line with the expectations, it would be considered very well and would help in restoring further confidence in the US economy but if that fails to impress and drops below 2 percent (Unlikely), the dollar might take a big hit to the downside. Any major upside surprise over 3.5 percent would be a major boost for the dollar.

The dollar index, which is the value of the dollar against a basket of currencies, is currently trading at 92.45, up 0.2 percent so far today.