Third Estimate 1Q2018 GDP Decreased To 2.0%. Corporate Profits Up -

Third Estimate 1Q2018 GDP Decreased To 2.0%. Corporate Profits Up

Jun 28, 2018Jeremy ParkinsonFinance0

The third estimate of first quarter 2018 Real Gross Domestic Product (GDP) was revised down to 2.0 % from the second estimate’s 2.2 %.

Analyst Opinion of GDP

The decline in GDP in this third estimate was primarily due to an consumer services spending and inventory change. The consumer spending declined from the previous quarter.

The market expected (from Nasdaq / Econoday):

Seasonally Adjusted Quarter-over-Quarter Change at annual rate Consensus Range Consensus

Advance

Actual

Second

Actual

Third

Actual

Real GDP 2.0 % to 2.4 % 2.2 % +2.3% +2.2 +2.0 GDP price index 1.9 % to 1.9 % 1.9 % +2.8 % +1.9 +2.2 Real Consumer Spending – Q/Q change 0.7 % to 1.1 % 1.0 % +0.7 % +1.0 +0.9

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 1Q2018, the year-over-year growth is now 2.8 % (down from the advance estimates 2.9 %) – up from 4Q2017’s 2.6 % year-over-year growth. So one might say that the rate of GDP growth improved 0.2 % 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.

Real GDP (blue line) Vs. Real GDI (red line) Expressed As Year-over-Year Change