GDP and 93-year averages

Brian Twomey Brian's Investment

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From 200 economic data points, the Bureau of Economic Analysis produces and reports Real GDP due to elimination of price fluctuations from Inflation. Inflation for the BEA is measured by the Price Index for Gross Domestic purchases. The important measure is price changes paid for goods and services. Similarly, the PCE consumption index is factored from the prices of Goods and services purchased by consumers. PCE is released alongside GDP.

On the opposite side to Real GDP is Nominal GDP as Inflation becomes a factor to measure Inflation in the price of goods and services produced including Exports but eliminates Imports. Nominal GDP factors the market value of all goods and services over each annual and 6-week period.

Real vs Nominal GDP measures price changes Vs the value and output of all goods and services. Real GDP is factored by dividing Nominal GDP to the Price Deflator. While Nominal GDP is factored by Real GDP X price deflator. The price deflator measure the output produced by Inflation.

The GDP price deflator for Q4 2023 rose 1.7% and 3.3% for Q 2023 while Real GDP rose 3.4% on an annual basis. The price index for gross domestic purchases increased 1.9 percent in Q4 2023. PCE increased 1.8%.

GDP 93-year average

GDP from annual averages 1930 to 2023 = 3.45. The 5 year average = 2.28 and 10 year at 2.41. The 15 and 20 year trades 2.35 and 2.05. From 2 to 20 year ranges from 1.93 to 3.4 at the 4 year and 2.95 at the 2 year average.

The Congressional Budget Office aligns with my averages as they factor GDP at 2.2% from 2024 to 2027 then 2.1 in 2028 and 2029. After 2030, GDP travels to 1.6 lows.

GDP last at 3.4 and expected 2.5 is a massive move lower. GDP must first break 2.95 then 2.6 at the 3 year average. The line at 2.6 is most vital. If this line breaks then GDP heads to 2.41, 2.35, 2.31 and 2.28 at the 5 year average.

Current GDP at 3.4 trades at the 93-year average and should much lower from an average perspective.

Author

Brian Twomey

Brian's Investment

Brian Twomey is an independent trader and a prolific writer on trading, having authored over sixty articles in Technical Analysis of Stocks & Commodities and Investopedia.

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