A lot of number crunching needs to happen before the advanced estimate for Q3 Gross Domestic Product (GDP) is released.
The Atlanta Fed expects Q3 GDP to check in at over 5 percent. Meanwhile, blue-chip economists are forecasting about 3.5 percent. Only time will tell whose crystal ball is more accurate –the Fed’s GDPNow tool or economists.
Whether it’s 3.5 or 5 percent, Q3 should show that the economy was humming along during the July-September quarter. That follows Q2 GDP of +2.1 percent and Q1 GDP of 2.2 percent.1
It also shows that companies continue to adjust to higher interest rates, have revamped their operations following the pandemic, and continue to do whatever it takes to be successful in the current economic climate.
Remember, GDP is a lag indicator, which means it measures how the economy has performed in the past. Lead indicators, like the Consumer Confidence Index (CPI) and the Purchasing Managers’ Index (PMI), give us a glimpse of what the future may hold.
So when you see the GDP number, check out if it’s closer to the forecast by the Fed or the blue chip economists. One thing is for certain: a GDP of between 3.5 to 5 percent is about as far away from recession as you can get!
1. Bureau of Economic Analysis, 2023