Friday, August 14, 2009

Monthly GDP for June fell by -0.1% (-0.7% annualized), Q3 tracking for a +2.8% annualized gain

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 slightly in June by -0.1% or -0.7% annualized, after no change in May (revised up from -0.2%), and real Q3 GDP is forecast to rise by +2.8% 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 June:

Monthly GDP declined 0.1% in June following roughly no change in May, which was revised lower from last month's initial reading of a 0.3% increase.  The slight decline in June reflected small and nearly offsetting changes in nonfarm inventory investment (a small decline) and final sales (a small increase).  The small increase in final sales was primarily accounted for by an increase in net exports.  The level of monthly GDP in June was 0.2% below the second-quarter average at an annual rate.  Average monthly increases of 0.4% per month would support our latest tracking forecast of a 2.8% increase in GDP in the third quarter.

(The MA web site has a report title that says that they have a revised tracking forecast for +2.7% real GDP growth in Q3.)

This report does not necessarily herald the return of happy days, but at least it is not indicating a worsening of the trend.

Real GDP in June was at the same level as in February 2006, which is 4.72% below the peak GDP in June 2008 and 4.07% below GDP at the start of the recession in December 2007.

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

-- Jack Krupansky

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