Friday will bring the first preliminary report covering fourth quarter (2011) Gross Domestic Product in the United States. Friday morning’s news is expected to show yet again that growth remains in the United States right now even if the woes of Europe and the lower activity in China and India could easily add pressure if things turn for the worst.
There is a slight discrepancy in headline estimates. Bloomberg has a consensus of 3.1% growth and Dow Jones has a consensus estimate of 3.0% on the headline data. The third quarter of 2011 was a meager 1.8% growth, but it was still growth and was better than the 1.3% the previous quarter.
Then there is the deflator with its inflationary barometer to offer a broader measurement. Bloomberg sees the price-adjusted GDP at 1.5% and Dow Jones is also expecting 1.5%. The previous quarter came in at +2.6%.
Estimates may change between now and 8:30 AM EST on Friday morning, but not likely by much. This is the first read and it will be given two revisions ahead with one reading in roughly 30 days and the final-adjusted readings in about 60 days.
For some housekeeping, investors need to start demanding that the media stop using the term “DOUBLE DIP RECESSION” ahead. If the U.S. were to suddenly catapult into a drastic contraction, the time has been too long for any double dip recession to be possible.
The next recession will arrive at some point. It is a part of the business cycle. That being said, the next recession will just be “the next recession” rather than “the double dip recession.”
All of the arguments can be made in the world that the U.S. never really got out of the recession. Much of the media still refers to today’s economy as a recession. The true definition is two consecutive quarters of negative GDP. That being said, even if things fell apart today into contraction rather than slower growth a recession is technically not possible until summer at the soonest and that would be almost three years of technical GDP growth.
JON C. OGG
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