The annual rate of seasonally adjusted GDP for the fourth quarter is expected to be 2.5% quarter-on-quarter.
We expect the first estimate of fourth quarter GDP to confirm that the US economy ended the year on a positive note. Based on the latest relevant releases, we expect a fourth quarter seasonally adjusted annualized rate of 2.5% QoQ.
We expect Personal Consumption Expenditure (PCE) inflation to rise 0.35% m/m in December, helping the annual rate ease to 4.5%, which would be welcome news for Fed officials ahead of their next meeting. The release of the income and expenditure report should also show further weakness in real spending as falling inflation appears to have coincided with weak volumes. We expect real consumption to fall -0.35% m/m in December, amid overall 4Q real consumption growth of around 2.8% QoQ seasonally adjusted.