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The Week Ahead: Will the GDP Bounce Back?

money-stepsThe Bureau of Economic Analysis (BEA) will release the second estimate for GDP growth on Friday, February 26, at 8:30 AM Eastern time. The GDP has been on the decline since posting a healthy 3.9 percent rate of growth for Q2 2015; since then, it has grown at a rate of 2.0 percent for Q3 and by a mere 0.7 percent in the “advance” estimate for Q4 released in January.

Will the GDP bounce back in the second estimate for Q4? The BEA always emphasizes that for any quarter, the “advance” estimate is based on incomplete data and is subject to further revisions. The second estimate is always based on more complete data.

The buzz among economists last month when the 0.7 GDP was announced was that the setback was temporary and that the economy will bounce back quickly.

“The slowdown in GDP growth to a very modest 0.7 percent annualized in the final quarter of last year is a temporary blip,” Capital Economics said. “With employment increasing by a monthly average of 284,000 during that quarter and final sales to domestic purchasers rising at a more acceptable 1.6 percent rate, we do not believe this is the start of a more serious downturn. GDP growth was 2.4 percent for 2015 as a whole and we anticipate a 2.5 percent gain in 2016.”

Existing-Home Sales Report for January—Coming Tuesday, February 23

Expect to see an influx of industry news in the last full week of February, including the highly-anticipated existing-home sales report from the National Association of Realtors. The last two reports on existing sales for November and December were cold and hot, respectively. Now, the industry is wondering what January's report will reveal.
Many economists in the mortgage industry felt was November's slump was just a temporary fallback for a huge comeback from the backlog of mortgage purchases during the implementation of the “Know Before You Owe” mortgage rule, commonly known as the TILA-RESPA Integrated Disclosure (TRID) rule, which went into effect on October 3, 2015.

The National Association of Realtors (NAR) reported that existing-home sales rose 14.7 percent to a seasonally adjusted annual rate of 5.46 million in December, up from 4.46 million in November. Year-over-year, existing-home sales are up 7.7 percent, and December's jump will mark the largest increase ever.

"We should expect next month's numbers to stabilize from the erratic November and December swings as agents and lenders continue to adapt to these new lending regulations. Last, the Federal Reserve's decision to increase interest rates by 0.25 percent last month didn't impact existing home sales, since mortgage rates have actually dropped sharply over the past month," said Ralph B. McLaughlin, Chief Economist at Trulia.

On the calendar for this week:

Tuesday, February 23, 2016
S&P Case-Shiller Home Price Index
9:00 AM ET

Existing-Home Sales
10:00 AM ET

Stanley Fischer Speaks—The Fed Vice Chair will be speaking in Houston on monetary policy.
8:30 PM ET

Wednesday, February 24, 2016
New Home Sales
10:00 AM ET

Jeffrey Lacker Speaks—The Richomond Fed President will deliver a speech in Baltimore on monetary policy's impact on growth
8:00 AM ET

Rob Kaplan Speaks—The Dallas Fed President will speak in Dallas on current economic conditions and monetary policy.
1:15 PM ET

James Bullard Speaks—The St. Louis Fed President will deliver a speech in New York.
6:30 PM ET

Thursday, February 25, 2016
Dennis Lockhart Speaks—The Atlanta Fed President will deliver opening remarks at the Banking Outlook Conference in Atlanta.
8:15 AM ET

FHFA House Price Index
9:00 AM ET

John Williams Speaks—The San Francisco Fed President will speak in New York on the economic outlook.
12:00 PM ET

Friday, February 26, 2016
GDP
8:30 AM ET

Lael Brainard Speaks—The Fed Governor will be on a panel in New York discussing international monetary policy synchronization.
1:30 PM ET

Jerome Powell Speaks—The Fed Governor will be on a panel in New York discussing Fed policy after liftoff.
10:15 AM ET

About Author: Brian Honea

Brian Honea's writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master's degree from Amberton University in Garland.
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