If there is one economic figure that can measure the overall U.S. economy, the top one is gross domestic product (GDP). This Friday’s GDP report will be highly watched by economists, business owners and politicians. It’s also going to offer a large tell about the overall direction for 2018 GDP, because this will now give economists a look at three of the four quarters of the year.

While President Trump is hoping for another 4% gain in GDP, the real issue already may be beyond what happened in the third quarter. The current earnings season has been marred by earnings disappointments and cautious guidance from some of America’s corporate titans. Tariffs are of course one issue, but the threat that the Federal Reserve is looking to keep raising interest rates is piling on top of weaker housing and more muted growth numbers from industrial companies and services companies alike.

Friday’s key GDP report from the U.S. Department of Commerce is expected to peg the figure at 3.4%, according to Dow Jones. That would be against a prior reading of 4.2% in annual and seasonally adjusted GDP gains in the second quarter.

Dow Jones also calls for third-quarter GDP’s chain-weighted price index to have risen 2.1% in the second quarter from a 3.0% gain in the second quarter.

Ahead of Friday’s GDP report, there are two key reports that will cover September. One is the monthly report on advance economic indicators. The second one, which more of a market-mover, is the advance report on durable goods. Dow Jones is calling for America’s big-ticket items to be down by 1.9% in September, but all interested parties that track the economy and markets know that durable goods can be extremely volatile and not be representative of a current economic cycle due to the big swings in the number.

Some market and economy watchers have been watching the GDPNow model from the Atlanta Federal Reserve Bank. The most recent update on October 17, 2018 was for GDP to come in with a 3.9% gain. That is actually lower than the 4.0% gain projected just two days earlier. This GDPNow forecast will be updated on Thursday, October 16 to reflect the impact of the durable goods report for September.

Another forecasting model is available from the Federal Reserve Bank of New York. The October 19, 2018, New York Fed’s Nowcast called for only 2.1% for the third quarter of 2018 and growth of 2.4% for the fourth quarter of 2018.

Many investors are likely to fall victim of the trap of backward-looking economics. We already have seen many of the trends that should impact the third quarter report for GDP. We know that retail spending was strong and consumer confidence was higher during the earlier part of the third quarter. The notion that roughly 70% of GDP is tied to consumer spending should act to keep GDP above the trends of 2017 and prior years. We also have had storms impact economic numbers in September that may act as a drag in third quarter.

The real rub needs to be how fourth-quarter GDP is starting to look. Corporate earnings seems a tad less enthusiastic, and overseas weakness and concerns around the president’s tariffs have continued to add pressure against what felt like smooth sailing earlier in 2018. There also have been continued fears around a slowdown that has been very evident in housing and construction meeting what some feel is a “peak earnings” theme in the market.

24/7 Wall St. will of course be paying close attention to third-quarter GDP, but our main care going forward is how GDP will shape up for the fourth quarter and looking into 2019 after the mid-term elections have come and gone in November.

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