Thursday, February 19, 2009

Monthly GDP for December fell by -1.3% (-14.4% annualized), Q1 tracking for a -4.6% annualized loss

Monthly real GDP, one of the five primary economic indicators that the NBER Business Cycle Dating Committee (NBER BCDC) uses to judge recession start and end dates, fell sharply in December by -1.3% or -14.4% annualized, after rising modestly by +0.4% in November (revised down from +1.2%), and real Q1 GDP is forecast to decline by -4.6% annualized, according to Macroeconomic Advisers (MA). The government does not publish GDP data at a monthly level, but the NBER Business Cycle Dating Committee says that they refer to sources such as Macroeconomic Advisers (MA) and their MGDP data series. As Macroeconomic Advisers summarized GDP for December:

Monthly GDP declined 1.3% in December, continuing the downward trend exhibited since the middle of last year.  The December decline was roughly accounted for by negative contributions from PCE, inventory investment, net exports, and construction.  The level of monthly GDP in December was 2.9% below the fourth-quarter average at an annual rate.  Our latest tracking forecast of a 4.6% annualized decline of GDP in the first quarter requires only 0.2% declines per month during the first quarter.  The average monthly decline in monthly GDP since the peak last June has been 0.5%.

Using the MA data, I calculate that Q4 real GDP declined by -5.84% on a quarter-to-quarter basis. We'll see how close this comes to the government's revised preliminary GDP when it comes out later this month. MA had previously forecast the Q4 decline to be -5.5%.

If the NBER BCDC is the definitive expert on marking of recessions, MA is the definitive expert on measuring real GDP at the monthly level with their MGDP data series.

-- Jack Krupansky

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