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(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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