The U.S. Bureau of Economic Analysis (US B.E.A) is scheduled to release its preliminary estimate of the Q3 GDP figures today, on December 23, at 8:30 AM EST. The U.S. economy is projected to have grown at an annual rate of 3.2% in the third quarter, adjusted for inflation, which is considered a rapid pace historically. Some analysts are putting the growth rate as high as 3.5% in Q3.
However, growth is expected to slow down from 3.8% in the second quarter, but still above the average of 2.6% since the third quarter of 2021.
The government shutdown in October and November postponed the release of the third-quarter GDP growth estimate. The advance figures were canceled due to furloughs at the BEA and other agencies, and preliminary data will be revised as more information is gathered.
Unemployment Impact on Q3
Nevertheless, there is something to watch out for. Stable consumption levels were mostly a result of strong job creation during Q2. Since the labour market has loosened beyond what the Fed would deem comfortable, that would not be the case in Q3.
According to the most recent Nonfarm Payrolls (NFP) report, the unemployment rate increased to 4.6% in November, above projections of 4.4%. 64K jobs were created in the same month, but estimates from prior months were revised downward, so employment in August and September combined is 33,000 fewer than previously reported.
Factors Impacting GDP
The GDP has become a less reliable measure of economic growth due to President Trump’s tariff campaign. An increase in imports before the implementation of import taxes caused a temporary decline in GDP during the first quarter, which was later reversed in the second quarter when imports decreased. Beneath the turmoil, economists believe the economy expanded in the third quarter, driven by consumer spending.
Introducing GDP Price Index
Another piece of news to keep in mind is that, in addition to the GDP release, the Bureau of Labour Statistics will issue the GDP Price Index, often known as the GDP deflator, which measures inflation across all domestically produced goods and services, including exports but not imports. The index stood at 2.1% in Q2, which is pretty good given the 3.8% recorded at
the start of the year.
Impact on USD Exchange Value
A higher GDP is favourable for a nation’s currency as it indicates economic growth, which boosts exports and attracts foreign investment. Conversely, a decline in GDP negatively impacts the currency.
Given the overall USD weakness, a negative report is likely to have a broader impact on the US currency, sending it lower. A better-than-expected figure, on the other hand, may provide some relief to USD bulls, but it is unlikely to alter the cur