Why Tomorrow's GDP Report Could Be WAY Better Than Anyone Expects


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Tomorrow we get the last revision to Q4 GDP.First the number came in at 2.8%.

Then upon first revision it was revised to 3.0%.

According to Bloomberg, the consensus is still it will stay at 3.0% upon tomorrow’s revision.

But maybe it will be way more.

Nomura has a new note out titled: US: Why Q4 GDP growth could be much higher than previously estimated

First they note that the December data from last year has been mostly revised higher, which augurs well for a good upward revision to this all-encompassing number.

Moreover, the incorporation of the Quarterly Services Survey (QSS), an important input for estimating household service consumption, might add a few more tenths to real GDP growth in Q4 2011. The annualized q-o-q growth rate of real personal service consumption was reported to be 0.74% in the second estimate of GDP, following 1.93% in Q3 and 1.86% in Q4. Considering other service-related data for Q4, such as the nonmanufacturing ISM survey and nonfarm payrolls in private service industries, the 0.74% increase seems to have underestimated service consumption. Although our expectation for the third estimate of Q4 GDP of 3.5% is already well above the market consensus of 3.0%, we think that there are some upside risks to our forecast.

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