GDP Growth Rate QoQ

GDP Growth Rate QoQ tracks Gross Domestic Product (the market value of finished output) for the United States. The headline is real GDP (inflation adjusted), unlike current-dollar GDP (measured at market prices). The BEA (Bureau of Economic Analysis) compiles it under the NIPAs (National Income and Product Accounts) using the NIPA Handbook (the methods guide).

Quarterly records start in the first quarter of 1947, and annual records go back to 1929. BEA compiles the figures from outside source data, not its own survey, and GDP tracks output rather than well-being.

The White House and Congress use it for the Federal budget, and the Federal Reserve uses it for monetary policy. Wall Street reads it as an activity gauge, and businesses use it for forecasts.

Each quarter brings three vintages: advance, second and third. The advance arrives near the end of month 1 after quarter-end, and the others near the ends of months 2 and 3. Each release is embargoed until 8:30 a.m. Eastern Time. The advance uses incomplete monthly data for the three quarter months, while later vintages use more complete source data.

Every release carries current-dollar and real GDP, the purchases price index, the PCE price index, and real final sales to private domestic purchasers. The second estimate adds preliminary corporate profits, and the third adds industry detail, revised profits and real GDI. Annual updates arrive in late September and revise at least the 5 latest years, while benchmark updates rewrite longer history about every 5 years.

BEA splits GDP through the expenditure approach as consumption plus investment plus government spending plus net exports (exports minus imports).

• Personal consumption expenditures (household spending): covers purchases of goods and services by households and nonprofits serving households.
• Gross private domestic investment (business and home investment): covers fixed structures, equipment, intellectual property, homes and inventory change (the volatile swing item).
• Net exports (trade balance): exports minus imports, so falling imports raise GDP by arithmetic.
• Government consumption and investment (public spending): final spending by federal, state and local governments.

In Q2 2020 real GDP fell 31.4% at an annual rate (9.0% quarterly) after a 5.0% annual rate drop in Q1. That is the third estimate, released September 30, 2020. Consumer spending, exports, business and home investment, inventories and state and local spending fell, while federal spending rose and lower imports cushioned the fall.

In Q3 2020 real GDP rose 33.4% at an annual rate (7.5% quarterly) yet stood 3.4% below Q4 2019. That is the third estimate, released December 22, 2020. That rebound came from spending, inventories, exports and business and home investment, while rising imports damped growth and each vintage moved about 0.3 point.

The lesson is that annual rates magnify quarterly pace, levels differ from rates, and falling imports cushion declines while rising imports dampen rebounds.

1. SAAR levels (yearly pace): BEA values each part at market prices as seasonally adjusted annual rates (seasonal patterns removed, quarterly level times 4).
2. Fisher split (quantity and price): BEA splits value into quantity and price with chain-type Fisher indexes using weights from 2 adjacent quarters, chained across time. The quantity index gives real GDP and the price index uses 2017 = 100, while chained-dollar levels do not add and contributions use indexes.
3. Quarterly rate (1 quarter's pace): Divide the Q2 level by Q1, subtract 1 and multiply by 100.
4. Annual rate (4-quarter pace) with example: Raise the quarterly ratio to the 4th power, subtract 1 and multiply by 100. Q4 2003 ($10,597.1B) over Q3 2003 ($10,493.1B) gives ratio 1.009911, or 1.0% quarterly; raising it to the 4th power gives 1.040237, or 4.0% annualized.