U.S. GDP: Levels, Ranges, Targets
From a technical perspective, there are low GDP readings because a significant cross over occurred in the averages. Averages 3, 4 and 5 year crossed below the 1 and 2 year. More importantly, 3, 4 and 5 year averages are now located below all averages from 1 to 10 years.
GDP Averages at 3, 4 and 5 year from 1.30, 1.76 and 1.80 must cross higher in order for GDP to rise further. Only then does GDP target 2.08, 2.12 and 2.15. Then begins the upper targets from 2.22, 2.30, 2.43, 2.45 and 2.55.
The entire GDP range runs from 1.30 to the 10 year average at 2.55. GDP 1.30 is the first point to cross to begin entrance into averages from 1 to 10 years. Current GDP for the past 2 quarters traded below every average from 1 to 10 years.
Consensus estimates reveals 1.30 and a further indication the averages will continue a further drop for the upcoming 4th quarter. Low GDP is hardly US dollar positive. What is revealed in GDP is more of the same low, low readings year over year.
As GDP averages continue to drop and as GDP fails to rise then the averages will take GDP lower over coming quarters. What is reported is Real GDP, yet its the slow increase as a percent change quarter to quarter contributes to low Real GDP drops.
What drove GDP last quarter was higher PCE, Non Residential Fixed Investments and exports. More importantly is the drop in Private Inventory Investments as goods sold failed to see a replenishment in supplies.
The best GDP targets for the averages are highs at 1.68 and 1.72 and lows from 0.3 to 0.93.