Third Estimate 2Q2018 GDP Unchanged At 4.2%. Corporate Profits Up -

Third Estimate 2Q2018 GDP Unchanged At 4.2%. Corporate Profits Up

Sep 27, 2018Jeremy ParkinsonFinance0

The third estimate of second quarter 2018 Real Gross Domestic Product (GDP) was unchanged at 4.2%.

Analyst Opinion of GDP

There was minor changes between the second and this third GDP estimate. I am not a fan of a quarter-over-quarter exaggerated method of measuring GDP – but my year-over-year preferred method showed good acceleration from last quarter.

The market expected (from Econoday):

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

Advance

Actual

Second

Actual

Third

Actual

Real GDP 4.0 % to 4.5 % 4.3 % +4,1 % +4.2 % +4.2 % GDP price index 3.0 % to 3.0 % 3.0 % +3.0 % +3.0 % +3.0 % Real Consumer Spending – Q/Q change 3.7 % to 4.0 % 3.8 % +4.0 % +3.8 % +3.8 %

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 2Q2018, the year-over-year growth is now 2.9 % – up from 1Q2018’s 2.6 % year-over-year. So one might say that the rate of GDP growth improved 0.3 % 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