The preliminary GDP price index q/q is an economic indicator that measures the change in prices of all goods and services included in the GDP, excluding imports, during a given quarter compared to the previous quarter. It provides insight into inflationary trends within the economy by showing how prices for domestically produced goods and services evolve.
Here are some key points about the preliminary Q4 GDP price index:
Definition: The GDP price index measures the average change in prices of all goods and services that make up the GDP. The “preliminary” release is the first estimate of these data for a given quarter and is subject to revision as more complete data becomes available.
Calculation: This index is calculated by taking nominal GDP (GDP, measured at current prices) and dividing it by real GDP (inflation-adjusted GDP, measured at constant prices). The result is an indicator that shows the price level change from one quarter to the next.
Importance: The preliminary GDP price index is a crucial indicator for economists, policy makers and investors because it helps measure inflationary pressures within the economy. Central banks, such as the Federal Reserve in the United States, closely monitor this indicator to make monetary policy decisions.
Impact on Markets: The release of the preliminary GDP price index can significantly impact the financial markets. Higher than expected index values may indicate higher inflation, leading to expectations of monetary policy tightening (e.g., higher interest rates). Conversely, lower-than-expected values may indicate lower inflation, which could lead to more accommodative monetary policy.
In short, the preliminary quarterly GDP price index is a key economic indicator that reflects inflationary trends within the economy based on price changes for goods and services included in the GDP. It plays a vital role in economic analysis and policy making.
Strong growth of the US economy in the fourth quarter of 2023
The US economy grew at a strong annual pace of 3.2% in the October-December period, driven by healthy consumer spending, the US Commerce Department reported on Wednesday, a slight reduction from its initial estimate.
The expansion in the country’s gross domestic product — the economy’s total production of goods and services — fell from 4.9% in the July-September period. Fourth-quarter GDP figures were revised down from the 3.3% pace initially reported by trade last month. The US growth rate has now exceeded 2% for the sixth straight quarter, defying fears that high interest rates will push the world’s largest economy into recession. Far from faltering, the economy grew by 2.5% throughout 2023, surpassing the 1.9% growth in 2022.
The release of the preliminary GDP price index could significantly impact the financial markets. Higher than expected index values may indicate higher inflation
Consumer spending, which represents about 70% of US economic activity, grew at a 3% annual rate from October through December. State and local government spending rose at an annual rate of 5.4% in the October-December period, the fastest pace since 2019. Export growth also contributed to the fourth-quarter growth.
Wednesday’s report also showed inflationary pressures continuing to ease. The Fed’s preferred measure of prices – the personal consumption expenditures price index – rose at an annual rate of 1.8% in the fourth quarter, down from 2.6% in the third quarter. Excluding volatile food and energy prices, so-called core inflation rose 2.1%, accelerating slightly from a 2% increase in the third quarter.
GDP Q1 2024 estimate and updates
Real GDP rose at an annual rate of 1.3 percent in the first quarter of 2024, according to the “second” estimate issued by the Bureau of Economic Analysis. In the fourth quarter of 2023, real GDP increased by 3.4 percent.
Today’s GDP estimate is based on more complete source data than was available for the “advance” estimate released last month. In the advance estimate, the increase in real GDP was 1.6%. The update primarily reflects a downward revision in consumer spending (see “GDP Updates”).
The increase in real GDP primarily reflects increases in consumer spending, residential fixed investment, nonresidential fixed investment, and state and local government spending, which were partially offset by declines in private inventory investment. Imports, which represent a subtraction in the GDP calculation, increased
Compared to the fourth quarter, the slowdown in real GDP in the first quarter primarily reflects a slowdown in consumer spending, exports, state and local government spending, and a decline in federal government spending. These movements were partly offset by an acceleration in fixed residential investment. Imports accelerated.
GDP in current dollars rose by 4.3% at an annual rate, or $298.9 billion, in the first quarter to a level of $28.26 trillion, a downward revision of $28.6 billion from the previous estimate. More information about the source data underlying the estimates is available in the “Key Source Data and Assumptions” file on the BEA website.
The price index for total domestic purchases rose 3.0 percent in the first quarter, a downward revision of 0.1 percentage point from the previous estimate. The personal consumption expenditures (PCE) price index rose 3.3 percent, a downward revision of 0.1 percentage point. Excluding food and energy prices, the personal consumption expenditures price index rose 3.6 percent, a downward revision of 0.1 percentage point.
