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Thread: with extremely little press coverage - 3rd revision of US Q3 GDP numbers

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    Default with extremely little press coverage - 3rd revision of US Q3 GDP numbers

    from

    (snip)"Q3 GDP Final Revision Of 2.6%, Lower Than 2.8% Consensus, Inventories Climb Again As Personal Consumption Revision Plunges

    Disappointing Goldman which had expected a far higher number, the third Q3 GDP revision came at 2.6%, 0.1% higher than the second, but lower than the 2.8% consensus. And, as we expected the inventory artificial growth push continues to accelerate, after there was a substantial drop in the far more important Personal Consumption component which misses not only consensus of 2.9%, but the second revision of 2.8%, coming at 2.4%. In other words, the PCE surge which drove stocks higher on the second GDP revision has now been eliminated post re-revision, yet its impact of spiking stocks back then naturally lingers: surely our ministry of truth has learned from the best.
    From the BEA: "The "third" estimate of the third-quarter increase in real GDP is 0.1 percentage point, or $1.1 billion, higher than the "second" estimate issued last month, primarily reflecting an upward revision to private inventory investment that was largely offset by a downward revision to personal consumption expenditures." And even uglier: corporate profits were up a meager 0.2%, compared to expectations of 1.3%, compared to a previous revision estimate of 1.0%. We are confident Jan Hatzius will spin this favorably shortly, and will bring you his "analysis" asap.

    As can be seen on the chart below, the biggest marginal contributor to the 2.6% annualized growth was inventories, which increased from a 1.3% contribution to 1.61%, as PCE plunged from 1.97% to 1.67%. The sad truth: Just Government [spending - sic] and Inventories [buildup - sic] account for virtually all the annualized GDP boost in Q3.(snip)


    In other words, once again the gov'ts 'rosey' early estimates have turned out to be way too optimistic compared to the actual numbers that are finally available. What was thought to be a significant improvement in consumer spending doesn't really exist ... but the official GDP calculation is just as 'happy' counting additional unsold products being added to retailer inventory as if those products had actually been sold !!!

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    Default Re: with extremely little press coverage - 3rd revision of US Q3 GDP numbers

    with Jan Hatzius' follow-up from Goldman Sachs ...

    (snip)"From Goldman Sachs:

    Actual: +2.6% qoq, +3.2% yoy
    Previous: +2.5% qoq
    Consensus: +2.8%
    Released: 22 December 2010 at 08:30 (New York time)

    Less Consumption; More Stockpiling

    BOTTOM LINE: The Great God Offset strikes again as weaker growth in consumption of services offsets most of the expected increase in inventory accumulation. So we end up with a GDP picture for Q3 that undoes most of last month's upward revision to domestic final sales. Price indexes revised down, reflecting (as usual for this time of the quarter) Call Report data on the prices of bank services.

    KEY NUMBERS:
    Real GDP growth +2.6% in Q3 (qoq, annualized, +3.2% yoy) vs. GS +3.0%, median forecast +2.8%.
    GDP price index +2.1% in Q3 (qoq, annualized, +1.2% yoy) vs. GS and median forecast +2.3%.
    PCE core index +0.5% in Q3 (qoq, annualized, +1.2% yoy) vs. GS and median forecast +0.8%.

    MAIN POINTS:
    1. Although real GDP was somewhat firmer on revision than previously reported, the revision was less than most analysts-including us-had anticipated. In our case, the decision to call for an upward revision was based on inventory data for September that showed more accumulation than had previously been reported. This did show up in the GDP report, as the accumulation rate jumped from $111.5bn to $121.4bn, adding about 0.3 points to the growth rate. However, consumer spending on services-an area not well covered by the data we see-proved much weaker than previously estimated. Most other categories of GDP were fairly close to the levels currently on record.

    2. As a result of these changes, the growth rate in real final sales drops back below 1%, to 0.9%, retracing half of last month's 0.6-point upward revision. If the trade balance is removed from that calculation, the growth rate in Q3 is 2.6%-the same as for real GDP-versus a preliminary report of 2.5% and 2.9% in last month's revision. Because the inventory accumulation rate now looks even more rapid than before, this will likely be a bigger drag in this quarter or the next. For the moment, we'll book that as a downside risk to offset the upsides that have been emerging elsewhere in the economy.

    3. Price indexes were revised lower, by 0.2 points for the GDP price index and 0.3 points for the PCE core index. These indexes incorporated updated information on bank service charges from the FDIC's quarterly Call Report, the usual cause of changes at this time of the quarter. This, coupled with updated information on health care services, was the primary source of the reduced estimates for real consumer spending as well."(snip)


    Considering that exotic dancers rely on 'consumer spending on services' for their incomes, it shouldn't be surprising to see the official figures finally recognizing that this area of consumer spending is down significantly !

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