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"Bringing the measurements of critical economic activities into the twenty-first century by
mining tracking data for an understanding of what American consumers were doing yesterday."


Daily Absolute Demand Index


 Daily Absolute Demand Index(1): 
 
Chart
(Click here for best resolution)
 
 Notes:
  (1) A projection of our basic year-over-year data into an aggregate absolute demand, reflecting the compounding impact of extended expansions or contractions. The daily data is normalized such that the year-long average for 2005 would be at 100 in the chart.


 





Monthly Absolute Demand Index


 Monthly Absolute Demand Index(3): 
 
Chart
(Click here for best resolution)
 
 Notes:
  (3) A projection of our basic year-over-year data into an aggregate absolute demand, reflecting the compounding impact of extended expansions or contractions. The data points represent month-long averages of the daily data, normalized so that the year-long average for 2005 would be at 100 in the chart.


 


Current Weighted Composite & Sector Index Values



Chart
(Click here for best resolution)


Last 10 Weighted Composite Index Values
Date:08/01/201808/02/201808/03/201808/04/201808/05/201808/06/201808/07/201808/08/201808/09/201808/10/2018
Value:97.1996.9496.8696.9196.5296.3296.7497.4098.0898.62


Current Values for Each of the Sector Indexes
Sector:AutomotiveEntertainmentFinancialHealthHouseholdHousingRecreationRetailTechnologyTravel
Value(3):92.0196.4787.6397.21106.51101.27102.2289.7296.23111.67

 Notes:
  (3) The 10 sectors contribute to our Weighted Composite Index according to weightings provided for their various sub-components by the United States Department of Commerce's National Income and Product Accounts ('NIPA') Tables (see our FAQs page for further explanations). In general, components in our Housing Sector have the highest weightings for durable goods in the NIPA matrix, while components in our Retail Sector contribute dynamically to many different line items in the weighting matrix, depending on specific goods involved.


 




Current Growth Index Values & Percentiles


Trailing 91, 183 and 365 Day Data
Trailing Days:91-Day183-Day365-Day
% Growth(4):-3.13%-2.72%-4.43%
Percentiles(5):5.86%3.76%0.21%

 Notes:
  (4) The average net year-over-year growth percentage of the Weighted Composite Index over the past 91, 183 and 365 Days (the daily value for the equivalent of a real-time Consumer 'GDP' for the trailing moving 'quarter', 'six months' and 'year').
  (5) The percentile of the above among all GDP quarters, six months and years since the spring of 1947 in the BEA's GDP growth tables (i.e., the percentage of all comparable time spans in the BEA's data below the values in the '% Growth' line above).


 

Commentary


     
  July 27, 2018 - BEA Estimates 2nd Quarter 2018 GDP Growth at 4.07%:

In their first ("Advance") estimate of the US GDP for the second quarter of 2018, the Bureau of Economic Analysis (BEA) reported that the US economy was growing at a +4.07% annual rate, up a significant +1.85% from a revised prior quarter.

In this report the BEA also performed their annual revisions to previous quarters, this time dating back to 1929. The average quarterly revision to the headline number for the past four quarters was downward and material at -0.19%, while the average quarterly revision for the headline over the period dating back to the beginning of 2008 was much smaller at -0.03%.

That small average revision masks the nature and volatility of the revisions. The standard deviation of the headline number's revisions dating back to 2008 was 0.46%, indicating that although over the long term the growth measurements were generally accurate, significant portions of that growth were initially misallocated at a quarterly level. The bulk of the revisions consisted of moving material amounts of the growth from one quarter to another.

During the second quarter of 2018 the growth rate for total consumer spending was reported to be +2.70%, up +2.34% from the revised prior quarter. Inventories contracted by -1.00%, while the growth rate in commercial fixed investment rose by a nearly offsetting +0.94%. Exports strengthened by +1.12% while imports weakened -- subtracting only -0.06% from the headline number.

Previously reported household income data was also extensively revised. Real annualized household disposable income increased by $205 per annum (in 2012 dollars), and the household savings rate was revised sharply upward to 6.8%.

For this revision the BEA assumed an effective annualized deflator of 3.21%. During the same quarter (April 2018 through June 2018) the inflation recorded by the Bureau of Labor Statistics (BLS) in their CPI-U index was significantly lower at 2.26%. Over estimating inflation results in pessimistic growth rates, and if the BEA's "nominal" data was deflated using CPI-U inflation information the headline growth number would have been much higher at a +5.16% annualized growth rate.

Among the notable items in the report :

-- Consumer expenditures for goods grew at a +1.24% annualized rate (up +1.37% from a revised prior quarter).

-- The contribution to the headline from consumer spending on services increased +0.97% to +1.46%. The combined consumer contribution to the headline number was +2.70%, up +2.34% from a revised 1Q-2018.

-- The headline contribution from commercial private fixed investments was +0.94%, down -0.40% from the prior quarter.

-- Inventories subtracted -1.00% from the headline number. It is important to remember that the BEA's inventory numbers are exceptionally noisy (and susceptible to significant distortions/anomalies caused by commodity price or currency swings) while ultimately representing a zero reverting (and long term essentially zero sum) series.

-- The growth in governmental spending added +0.37% to the headline number, up +0.10% from a revised prior quarter.

-- Exports contributed +1.12% to the headline number, up +0.69% from the prior quarter.

-- Imports subtracted only -0.06% from the headline number, up +0.39% from the prior quarter. In aggregate, foreign trade added +1.06% to the headline number.

-- The "real final sales of domestic product" growth was a very healthy +5.07%, up a substantial +3.12% from a revised prior quarter. This is the BEA's "bottom line" measurement of the economy and it excludes the inventory data.

-- As mentioned above, real per-capita annual disposable was reported to have grown $205 quarter-to-quarter in this report. The household savings rate was reported to be 6.8%. Nearly all of the personal income numbers were revised (including the quarter-by-quarter household savings rates, which were nearly doubled in revision over the past two years), and the reporting was shifted from chained 2009 dollars to 2012 dollars.




The Numbers, Nearly All Revised

As a quick reminder, the classic definition of the GDP can be summarized with the following equation :

GDP = private consumption + gross private investment + government spending + (exports - imports)


or, as it is commonly expressed in algebraic shorthand :

GDP = C + I + G + (X-M)


In the new report the values for that equation (total dollars, percentage of the total GDP, and contribution to the final percentage growth number) are as follows :

GDP Components Table

Total GDP = C + I + G + (X-M)
Annual $ (trillions) $20.4 = $13.9 + $3.6 + $3.5 + $-0.6
% of GDP 100.00% = 68.02% + 17.53% + 17.16% + -2.71%
Contribution to GDP Growth % 4.07% = 2.70% + -0.06% + 0.37% + 1.06%


The quarter-to-quarter changes in the contributions that various components make to the overall GDP can be best understood from the table below, which breaks out the component contributions in more detail and over time. In the table below we have split the "C" component into goods and services, split the "I" component into fixed investment and inventories, separated exports from imports, added a line for the BEA's "Real Final Sales of Domestic Product" and listed the quarters in columns with the most current to the left :

Quarterly Changes in % Contributions to GDP

2Q-2018 1Q-2018 4Q-2017 3Q-2017 2Q-2017 1Q-2017 4Q-2016 3Q-2016 2Q-2016 1Q-2016 4Q-2015 3Q-2015 2Q-2015 1Q-2015
Total GDP Growth 4.07% 2.22% 2.29% 2.82% 3.00% 1.79% 1.77% 1.92% 2.28% 1.54% 0.41% 0.97% 3.35% 3.32%
Consumer Goods 1.24% -0.13% 1.42% 0.86% 1.17% 0.40% 0.58% 0.70% 1.01% 0.72% 0.51% 0.91% 1.02% 0.94%
Consumer Services 1.46% 0.49% 1.22% 0.65% 0.79% 0.82% 1.17% 1.09% 1.29% 0.90% 1.02% 1.00% 1.29% 1.41%
Fixed Investment 0.94% 1.34% 1.04% 0.44% 0.72% 1.60% 0.28% 0.52% 0.46% 0.31% -0.33% 0.51% 0.63% -0.01%
Inventories -1.00% 0.27% -0.91% 1.04% 0.23% -0.80% 1.03% -0.59% -0.62% -0.62% -0.70% -0.73% -0.25% 2.16%
Government 0.37% 0.27% 0.41% -0.18% 0.01% -0.13% 0.03% 0.17% -0.15% 0.60% 0.12% 0.33% 0.70% 0.40%
Exports 1.12% 0.43% 0.79% 0.42% 0.44% 0.59% -0.44% 0.71% 0.39% -0.31% -0.28% -0.44% 0.48% -0.56%
Imports -0.06% -0.45% -1.68% -0.41% -0.36% -0.69% -0.88% -0.68% -0.10% -0.06% 0.07% -0.61% -0.49% -1.02%
Real Final Sales 5.07% 1.95% 3.20% 1.78% 2.77% 2.59 0.74% 2.51% 2.90% 2.16% 1.11% 1.70% 3.60% 1.16%





Summary and Commentary

A headline number showing +4.07% growth makes us want to break into a boisterous refrain of "Happy Days are Here Again." Some will undoubtedly claim that the "Tax Cuts and Jobs Act of 2017" is making America great again. And the BEA's own "bottom line" Real Final Sales growth was reported to be +5.07% -- a number that some might consider to be unsustainably high or an early indication of an overheating economy. At minimum it signals that the Fed's accommodations over the past decade are no longer needed.

One cautionary point should be made for the data geeks: in a number of cases (particularly household savings rates) the revisions were substantial enough that they materially changed our understanding of how the historical economy was behaving. As a glaring example, the household savings rates since 2012 were substantially increased -- including an essential doubling of the savings rates for the prior four quarters. These kind of revisions suggest major methodology changes that can make historical comparisons problematic.

While we are pleased to find the economy growing far faster than we had previously expected, the historical revisions leave us with a sense of unease.
 
     
   
 Note: A more complete list of historical commentary can be found on our History Page ...
 
   


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