U.S. third quarter GDP preview

Today, U.S. third-quarter GDP figure will be released at 13:30 GMT.

This is the final reading of the third quarter GDP of the United States.  This would be a very vital piece of an economic docket to assess the health of the economy. There have been concerns have surfaced that the economy could face recession in the next 12 months. JPMorgan has estimated that there are one in three chances that the economy would face a recession next year.

However, the election of Republican candidate Donald Trump has diminished the probability of a looming recession as many of her policies such as increased infrastructure spending, tax reforms are pro-growth. However, a shortfall in those promises likely to hit both sentiment and growth.  

Past trends –

• U.S. GDP picked up pace since 2013 and increased pace in 2014. However, after rising 5 percentage and 2.2 percentage in previous two-quarters, U.S. GDP shrank by -0.1 percentage in the first quarter of 2015. Historically speaking, the U.S. economy usually falters in the first quarter.
• The second quarter was relatively better, with GDP growing at 2.1 percentage in the second quarter from the first.
• Growth has slowed further in third quarter, with GDP growing about 1.3 percentage.
• Final quarter GDP was much better than expected at 1.4 percentage, still meager compared to 2014.
• GDP grew by 1.1 percent in the first quarter of 2016 and the second quarter GDP grew by 1.4 percent.
• According to the second flash estimate, GDP grew by 3.2 percent annualized rate in the third quarter.

Expectation today –

• It is expected on the upper side today.  According to median estimate, the economy is expected to grow by 3.3 percent in the third quarter.

Market impact –

If the actual number comes in line with the expectations, it would be considered very well and would help in restoring further confidence in the US economy but if that fails to impress and drops below 2 percent (Unlikely), the dollar might take a big hit to the downside. Any major upside surprise over 3.5 percent would be a major boost for the dollar.

The dollar index, which is the value of the dollar against a basket of currencies, is currently trading at 102.9, down 0.1 percent so far today.