Importance: ***

Definition: The GDP report includes inflation information. There are a number of price indexes published in the GDP report: the Chain-Weight Price Indeces of GDP, Final Sales and Gross Domestic Purchases;  the Fixed-Weight Implicit Price Deflators of GDP, GNP and Gross Domestic Purchases. For an analysis of the difference between fixed-wight and chain-weight indeces see Chapter 1of the Lecture Notes in Macoeconomics.

Related Indicators:  While these price deflator data are published quarterly, some related price data such as the Consumer Price Index (CPI) and the Producer Price Index (PPI) are published instead on a monthly basis.

Source: Department of Commerce, BEA, NIPA dataset.

Frequency: Quarterly, revised monthly. The GDP for a given quarter and its associated price deflators are released in the first month following a quarter as the "advance estimate". The "preliminary estimate" is published in the second month, followed by the "revised" estimate in the third month.

Availability: Three to four weeks following the reported quarter
 
Direction: Procyclical as inflation tends to go up in booms and fall during recessions.

Timing: Coincident indicator

Volatility: Low

Likely Impact on Financial Markets:

Interest Rates: Larger-than-expected quarterly increase in price inflaton or increasing trend is considered inflationary; this will cause bond prices to drop and yields and interest rates to rise.

Stock Prices: Higher than expected price inflation is bearish on the stock market as higher inflation will lead to higher interest rates.

Exchange Rates: High inflation has an uncertain effect. It would lead to a depreciation as higher prices mean lower competitiveness. Conversely, higher inflation causes higher interest rates and a tighter monetary policy that leads to an appreciation.

Graphs of the latest Gross Domestic Purchases Price Index from The Economic Statistics Briefing Room of the White House

A table with the most recent GDP Deflator data  from the BEA

The latest GDP report from BEA

See the Dismal Scientist Homepage for charts, tables and analysis of the latest report.

You can see GDP Deflator charts with the Economic Chart Dispenser

You can create customized Price Deflator Charts with the Economic Chart Maker  Tip: type "GROSS DOMESTIC PRODUCT" in the Label section of the form and choose the transformation of the data you are interested in.

An analysis of the GDP report from First Union

An Analysis of the GDP report from Morgan Stanley's Stephen Roach