Advance Estimate 1Q2017 GDP Quarter-Over-Quarter Growth At 0.7 Percent

Written by Jill Mislinski and Steven Hansen

The advance estimate of first quarter 2017 Real Gross Domestic Product (GDP) is a positive 0.7 %. This growth is less good than the previous quarter’s 2.1 % if one looks at quarter-over-quarter headline growth. Year-over-year growth improved modestly so one could say economic growth was better.

Analyst Opinion of GDP

The consumer spending decline, the trade balance improved – and GDP lost almost 1% due to the gaming of inventory hocus-pocus. I am not a fan of quarter-over-quarter exaggerated method of measuring GDP – but my year-over-year preferred method showed only moderate deceleration from last quarter. First quarter GDP seems plagued with seasonal adjustment issues – as low numbers occur often since the end of the Great Recession.

The market expected (from Bloomberg / Econoday):

Seasonally Adjusted Quarter-over-Quarter Change at annual rate Consensus Range Consensus Actual Real GDP 0.7 % to 1.7 % 1.1 % +0.7 % GDP price index 1.4 % to 2.4 % 2.1 % +2.3 % Real Consumer Spending – Q/Q change 0.4 % to 1.5 % 0.7 % +0.3 %

Consider:

This advance estimate released today is based on source data that are incomplete or subject to further revision. (See caveats below.) Please note that historically advance estimates have turned out to be little more than wild guesses.

Headline GDP is calculated by annualizing one quarter’s data against the previous quarters data. A better method would be to look at growth compared to the same quarter one year ago. For 1Q2017, the year-over-year growth is 1.9 % – down from 4Q2016’s 2.0 % year-over-year growth. So one might say that the rate of GDP growth decelerated +0.1 % from the previous quarter.

Real GDP Expressed As Year-over-Year Change

The same report also provides Gross Domestic Income which in theory should equal Gross Domestic Product. Some have argued the discrepancy is due to misclassification of capital gains as ordinary income – but whatever the reason, there are differences.