4th quarter GDP is due at 8:30 AM
The US GDP for the 4th quarter will be released at 8:30 AM This is the Preliminary release for the data. There has been a first cut release already. That came in at -3.8% with Consumption down 3.5%. The estimate is for a GDP to show a much larger decline of 5.4% on an annuualized basis. Consumption is expecteed to decline by 3.7%. The revisions from the 1st cut are as a result of reduced inventories and worse inflation adjusted trade deficits.
A decline of 5.4% will be the worst reading since the 1st quarter of 1982 when GDP fell by 6.4%. More and more of the data is making the current downturn comparable to the 1980 to 1982 recessionary period. During that time period there was an initial back to back decline in GDP but it was followed by two quarters of >7.6% growth. Later in Dec 81 and Mar 82, the back to back declines had a more modest bounce back (in fact the middle quarter had a 1.5% decline). After that, the growth surged to 7% to 9% growth.
This decline, has economists talking of the possibility of a 10% decline in GDP for the 1st quarter. Moreover, the employment situation is looking more bleak as well. Will we see the post recession surge like in 1983? We will most likely need to wait a year or so. Stay tuned….
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