Today’s Advance GDP for the second quarter came in weaker than expected at less than half of the consensus forecast (1.2% vs 2.6%). If you follow how economic data regularly comes in relative to expectations, today’s weaker than expected print should come as no surprise. The table to the right is from our Economic Indicator Database and shows the actual (unrevised) versus estimated Advance GDP print for every quarter of the current economic expansion. As shown in the table, Friday morning’s GDP print was the seventh straight weaker than expected report. In other words, the last time one of these reports surpassed expectations was in October 2014.
Overall, the record for Advance GDP prints during the current recovery isn’t much better. In the 29 quarterly Advance GDP reports since the second half of 2009, only nine have been better than expected, while 20 have missed the mark – that’s more than two-thirds of the time! In terms of the equity market’s reaction to Advance GDP reports, there hasn’t been a clear trend. Overall, the S&P 500 has averaged a gain of 0.10% (median: -0.03%) with positive returns a little less than half of the time.