The United States Bureau of Economic Analysis (BEA) is poised to unveil the preliminary estimate of the Gross Domestic Product (GDP) for the final quarter of 2024 on Thursday. This pivotal report will be published at 13:30 GMT on Wednesday, providing crucial insights into the health of the US economy. Analysts anticipate that the GDP will grow at an annualized rate of 2.8% during this period, marking a slight decline from the 3.1% recorded in the previous quarter. The report is expected to convey robust economic growth, albeit at a tempered pace compared to earlier in the year.
The GDP Price Index, an essential measure of inflation tracking price changes in domestically produced goods and services, is projected to rise by 2.5% in the fourth quarter. Alongside this, the core Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's preferred inflation gauge, is expected to reach 2.5%, up from 2.2% in the third quarter. These indicators suggest persistent inflationary pressures within the economy.
The BEA's preliminary GDP release is a significant event for financial markets, as it serves as a definitive indicator of US economic vitality. Market participants will closely scrutinize the data to gauge the trajectory of the economy and potential implications for future monetary policy decisions.
Expectations are set for an annualized economic growth rate of 2.8% in Q4 2024, slightly below the preceding quarter's 3.1%. This forecast aligns with projections from the GDPNow model by the Federal Reserve Bank of Atlanta, which estimates real GDP growth at 3.2% on Tuesday, having risen from 3.0% on January 17.
In December, the Federal Reserve released its latest Summary of Economic Projections (SEP), reflecting upward revisions in 2025 year-end growth to 2.1% from 2%, and an increase in core inflation estimates to 2.5% from 2.1%. These revisions highlight a cautiously optimistic outlook for sustained economic expansion in the coming years.
Meanwhile, the Federal Reserve's hawkish pause presents headwinds for non-yielding commodities, as investors weigh inflationary concerns against potential interest rate hikes. The US Dollar Index (DXY) experienced a recovery amid a risk-averse environment at the beginning of the week but remains significantly below its mid-January high of 110.18.
"The US Dollar Index (DXY) recovered amid a risk-averse environment at the beginning of the week but stands far below the monthly high posted in mid-January at 110.18. At the same time, the ongoing advance lacks momentum, according to technical readings in the daily chart. The January 23 intraday high at 108.50 comes as an immediate barrier ahead of the 109.00 figure. Should the index surpass the latter, market players will be looking at the 109.40-109.50 region as a potential bullish target." – Valeria Bednarik, FXStreet Chief Analyst
Despite these challenges, technical readings suggest limited momentum behind the dollar's current advance. Analysts caution that any decline below 107.75 could expose lower levels, such as the January bottom at 106.97.
"A decline below 107.75, the January 29 intraday low, exposes the monthly bottom at 106.97. Still, and given the risk-averse environment, US Dollar dips could be seen as buying opportunities, with additional falls unlikely in the near term." – Valeria Bednarik, FXStreet Chief Analyst
The forthcoming GDP report will also include fresh figures for Personal Consumption Expenditures (PCE) – Price Index, offering further clarity on consumer spending trends and inflationary dynamics within the economy.