December 08 quarter GDP out today

So, GDP is out today.  The market expects a 1% fall, ANZ has gone as far as 1.2% (I’m talking about a quarterly seasonally adjusted fall – none of this annualised rubbish).

Now, I’m not so sure.  Yesterday’s current account deficit came in on the money, but the deficit as a % of GDP was lower than expectations.  There are three possibilities:

  1. The GDP deflator is going to be mighty strong (even with inflation pressures tumbling and the TOT falling),
  2. December activity is above expectations,
  3. Previous activity has been revised up (at least within the last year).

Now, it is dodgy trying to get a feeling out the the BOP figures for what GDP is – but with current estimates I could only get a small GDP fall to justify a 8.9% current account deficit.  Combined with the hours worked revision today’s decline might be relatively small.

7 replies
  1. goonix
    goonix says:

    Agreed with the annualised thing – heard it on the radio this morning wrt the US and it is a pretty misleading way of putting things.

  2. Matt Nolan
    Matt Nolan says:

    The annualised rate gives you a number that tells you what annual growth would be if the current quarterly rate of growth remained for the whole year.

    As a result, GDP might fall by 0.1%, but the annualised rate would be closer to 0.4% – so it makes movements sound a lot bigger than they are.

    As a result, you hear that “annualised GDP fell 6.3% in the US” – but the actual seasonally adjusted fall in GDP was only 1.5%.

    It is a bit misleading – as it sort of tricks people who don’t know about the numbers to believe that the movements in GDP are a lot bigger than they actually are …

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