GDP Growth Annualized

GDP Growth Annualized is the quarter to quarter percent change in Canada's real GDP, or output adjusted for price changes, compounded to an annual rate. It shows how fast output grew if one quarter's pace continued for four quarters, mainly for comparison with the United States. It covers all production inside Canada's borders and comes from spending data, not monthly industry output or nominal values; income-side changes are nominal. The headline lives in Table 3 of the Statistics Canada release titled Gross domestic product, income and expenditure.

Statistics Canada publishes the report four times yearly, within 60 days after each quarter, at 8:30 Eastern in The Daily, its official bulletin. It usually appears near the end of the second month after the quarter, but dates can shift, so confirm each date in the release calendar.

Each release also shows income data in current prices, real spending tables, the saving rate, disposable income, price gauges and drivers in percentage points. Revisions follow a cycle: first quarter revises last year, second revises the first, third revises three years, fourth revises this year, sometimes back to 1961.

Real spending growth comes from household demand, investment, stock changes and trade flows, in six groups. Final domestic demand groups consumption and fixed investment before trade and inventories.

• Household consumption, close to 60%: what households spend on durables, semi-durables, non-durables and services, the largest component.
• Government consumption and investment: what governments spend on goods and services, plus structures, equipment and intellectual property.
• Business fixed investment: spending on non-residential structures, equipment, intellectual property and housing.
• Inventories: unsold goods that firms stock or draw down, a volatile swing factor.
• Net exports: export volumes minus import volumes, so falling imports lift GDP since imports are foreign production.
• Statistical discrepancy: the gap between the two independent income and spending estimates, whose size gauges reliability.

In Q2 2020, released August 28, 2020, real GDP fell 11.5%, or 38.7% annualized, the steepest drop since quarterly records began in 1961. Household spending fell 13.1%, business investment 16.2%, exports 18.4% and imports 22.6%, with a $37.7 billion inventory drawdown.

In Q3 2020, released December 1, 2020, output grew 8.9%, again a record, yet stood 5.3% below Q4 2019. Later data revised the Q2 drop to 11.3% and cut the saving rate from 28.2% to 27.5%, showing first prints move. So the record jump was not a full recovery.

1. Nominal total: Add all final sales to households, governments, investors and net exports in current prices, excluding intermediate sales to avoid double counting. Add half the statistical gap between income and spending estimates.
2. Real volumes: Remove price change from each part with its price index, using the chained Fisher formula since May 31, 2001. Levels are expressed in chained dollars, price-adjusted units tied to a moving reference year.
3. Seasonal adjustment: Remove regular seasonal swings with X-12-ARIMA and show quarterly levels at annual rates, or the quarter times 4.
4. Quarterly % change: Divide the GDP gain by last quarter's GDP; for example, 2,020,000 versus 2,000,000 gives 1.0%.
5. Annualized % change: Compound the quarterly rate as ((GDP this quarter / GDP last quarter) to the 4th power minus 1) times 100. So 1.0% quarterly becomes 4.06% annualized, and an 11.5% quarterly drop becomes a 38.7% annualized drop.
6. Contributions: Show each part's contribution to growth in percentage points.