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We’re getting a first look at how Uncle Sam fared in the last quarter of 2021!

Did the economy enjoy a strong spending boost during the holidays? Or did Omicron concerns bring some headwinds to growth?

Here’s what you need to know if you’re trading the U.S. advance GDP release.

What is this report all about?

The gross domestic product (GDP) is basically an economic report card. This figure sums up the country’s performance in terms of trade, consumer activity, government spending and investment for a particular period.

In Uncle Sam’s case, the GDP is printed on a quarterly basis in three versions: advance, preliminary, and final. Being the first among these releases, the advance version tends to be the most exciting one to watch and trade.

What happened last time?

  • U.S. advance GDP came in at 2.0% vs. 2.6% consensus in Q3 2021
  • This was much slower than the previous 6.7% expansion in Q2
  • Q3 GDP reading was upgraded from 2.0% to 2.3% later on

Uncle Sam printed the fourth consecutive downside surprise in its advance GDP report when the figure came in at 2.0%, short of the 2.6% forecast.

This also marked a significant slowdown from the earlier 6.7% growth figure, even though the final Q3 GDP reading was revised higher to 2.3% a few months later.

Underlying components of the report revealed that the downturn was mostly due to supply chain concerns and restrictions to curb the Delta variant spread back then.

What’s expected for the upcoming release?

  • Growth likely picked up to 5.3% in Q4 2021
  • Advance GDP price index expected to hold steady at 6.0%

Number crunchers are predicting a rebound in growth for the last quarter of 2021, as supply chain issues eased and the economy likely enjoyed a boost from shopping sprees during the Thanksgiving and Christmas holidays.

Stronger than expected results could convince dollar bulls that the U.S. economy is out of the woods and might no longer need as much stimulus moving forward.

Keep in mind, though, that the upcoming advance GDP release comes a day after the FOMC statement. If you’re trading this top-tier report, it would make sense to see where Fed officials’ heads are at.

In other words, a hawkish Fed statement followed by an upbeat GDP report could bolster rate hike bets for mid-2022, which might be a very bullish scenario for the dollar.

On the other hand, a cautious Fed announcement underscored by a downside GDP surprise could dash hopes of seeing the Fed tighten monetary policy anytime soon.