Virtually everyone I speak with on The Street is looking toward Thursday morning’s GDP report for the 3rd quarter of 2009. This is supposedly THE quarter, the one that proves we are, in fact, growing again.
When explaining to clients what the GDP report actually is, I use the following quick-and-dirty equation:
Consumption + Investment + Government spending + (Exports – Imports) = GDP
The market’s expectation is for GDP growth to be 3.2% for the three months ended in September. The consumption component should be helped (artificially) by this summer’s Cash For Clunkers program, and of course, breakneck spending will bolster the government portion.
One twist to be aware of is how the inventory data within the report is interpreted…
From Decision Economics:
The single most important release is likely to be the third-quarter (Thu)—which could have much greater than normal force in shaping the quarter-ahead outlook, because of forecasts uncertainties relating to the pivotal inventory component. In particular, an inventory surprise that tended to restrain third-quarter growth would be widely seen as tending to boost the fourth quarter, perhaps lifting hopes for better employment and consumer spending, then and beyond.
Prior to Thursday morning’s GDP report, investors will be watching for the August Case-Shiller Home Price Index and the October Consumer Confidence report, both due out on Tuesday. We’ll also get durable goods and new-home sales on Wednesday along with jobless claims on Thursday.
It’s going to be a big week for economic data, so good luck and keep in mind what to watch for.
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