Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
The Beatings Will Continue Until the Economy Improves - 6th Jul 20
The Corona Economic Depression Is Here - 6th Jul 20
Stock Market Short-term Peaking - 6th Jul 20
Gold’s Major Reversal to Create the “Handle” - 5th July 20
Gold Market Manipulation And The Federal Reserve - 5th July 20
Overclockers UK Custom Build PC Review - 1. Ordering / Stock Issues - 5th July 20
How to Bond With Your Budgie / Parakeet With Morning Song and Dance - 5th July 20
Silver Price Trend Forecast Summer 2020 - 3rd Jul 20
Silver Market Is at a Critical Juncture - 3rd Jul 20
Gold Stocks Breakout Not Confirmed Yet - 3rd Jul 20
Coronavirus Strikes Back. But Force Is Strong With Gold - 3rd Jul 20
Stock Market Russell 2000 Gaps Present Real Targets - 3rd Jul 20
Johnson & Johnson (JNJ) Big Pharma Stock for Machine Learning Life Extension Investing - 2nd Jul 20
All Eyes on Markets to Get a Refreshed Outlook - 2nd Jul 20
The Darkening Clouds on the Stock Market S&P 500 Horizon - 2nd Jul 20
US Fourth Turning Reaches Boiling Point as America Bends its Knee - 2nd Jul 20
After 2nd Quarter Economic Carnage, the Quest for Philippine Recovery - 2nd Jul 20
Gold Completes Another Washout Rotation – Here We Go - 2nd Jul 20
Roosevelt 2.0 and ‘here, hold my beer' - 2nd Jul 20
U.S. Dollar: When Almost Everyone Is Bearish... - 1st Jul 20
Politicians Prepare New Money Drops as US Dollar Weakens - 1st Jul 20
Gold Stocks Still Undervalued - 1st Jul 20
High Premiums in Physical Gold Market: Scam or Supply Crisis? - 1st Jul 20
US Stock Markets Enter Parabolic Price Move - 1st Jul 20
In The Year 2025 If Fiat Currency Can Survive - 30th Jun 20
Gold Likes the IMF Predicting a Deeper Recession - 30th Jun 20
Silver Is Still Cheap For Now - 30th Jun 20
More Stock Market Selling Ahead - 30th Jun 20
Trending Ecommerce Sites in 2020 - 30th Jun 20
Stock Market S&P 500 Approaching the Precipice - 29th Jun 20
APPLE Tech Stock for Investing to Profit from the Machine Learning Mega trend - 29th Jun 20
Student / Gamer Custom System Build June 2020 Proving Impossible - Overclockers UK - 29th Jun 20
US Dollar with Ney and Gann Angles - 29th Jun 20
Europe's Banking Sector: When (and Why) the Rout Really Began - 29th Jun 20
Will People Accept Rampant Inflation? Hell, No! - 29th Jun 20
Gold & Silver Begin The Move To New All-Time Highs - 29th Jun 20
US Stock Market Enters Parabolic Price Move – Be Prepared - 29th Jun 20
Meet BlackRock, the New Great Vampire Squid - 28th Jun 20
Stock Market S&P 500 Approaching a Defining Moment - 28th Jun 20
U.S. Long Bond: Let's Review the "Upward Point of Exhaustion" - 27th Jun 20
Gold, Copper and Silver are Must-own Metals - 27th Jun 20
Why People Have Always Held Gold - 27th Jun 20
Crude Oil Price Meets Key Resistance - 27th Jun 20
INTEL x86 Chip Giant Stock Targets Artificial Intelligence and Quantum Computing for 2020's Growth - 25th Jun 20
Gold’s Long-term Turning Point is Here - 25th Jun 20
Hainan’s ASEAN Future and Dark Clouds Over Hong Kong - 25th Jun 20
Silver Price Trend Analysis - 24th Jun 20
A Stealth Stocks Double Dip or Bear Market Has Started - 24th Jun 20
Trillion-dollar US infrastructure plan will draw in plenty of metal - 24th Jun 20
WARNING: The U.S. Banking System ISN’T as Strong as Advertised - 24th Jun 20
All That Glitters When the World Jitters is Probably Gold - 24th Jun 20
Making Sense of Crude Oil Price Narrow Trading Range - 23rd Jun 20
Elon Musk Mocks Nikola Motors as “Dumb.” Is He Right? - 23rd Jun 20
MICROSOFT Transforming from PC Software to Cloud Services AI, Deep Learning Giant - 23rd Jun 20
Stock Market Decline Resumes - 22nd Jun 20
Excellent Silver Seasonal Buying Opportunity Lies Directly Ahead - 22nd Jun 20
Where is the US Dollar trend headed ? - 22nd Jun 20
Most Shoppers have Stopped Following Supermarket Arrows, is Coughing the New Racism? - 22nd Jun 20

Market Oracle FREE Newsletter

AI Stocks 2020-2035 15 Year Trend Forecast

BEA Revises 3rd Quarter 2015 U.S. GDP Growth Upward to 1.99%

Economics / US Economy Dec 22, 2015 - 07:31 PM GMT

By: CMI

Economics

In their third (and "final") estimate of the US GDP for the third quarter of 2015, the Bureau of Economic Analysis (BEA) reported that the economy was growing at a +1.99% annualized rate, down -0.08% from their previous estimate -- and down nearly 2% (-1.93%) from the second quarter.

Almost all of the revisions in this report were minor, with the largest changes again involving the especially noisy inventory data. Most of the other line items were essentially unchanged. Inventories were reported to have been contracting at a -0.71% annualized rate, a -0.12% deterioration from from the -0.59% contraction rate reported in the previous estimate. As we have mentioned a number of times before, the BEA's treatment of inventories can introduce noise and seriously distort the headline number over short terms -- which the BEA admits by also publishing a secondary headline that excludes the impact of inventories. This BEA "bottom line" (their "Real Final Sales of Domestic Product") was actually revised upward +0.04% to a +2.70% growth rate for the third quarter, from the +2.66% previously reported.


Consumer activity once again contributed the vast bulk of the headline number (providing +2.04% in total), although that contribution was minimally less than in the previous estimate (down -0.01% in aggregate). Fixed commercial investments and governmental spending were both slightly improved, while exports and imports both weakened slightly from the previous estimate.

Household income was revised modestly downward. Real annualized per capita disposable income was reported to be $38,248 per annum, down $12 from the previous estimate but still up $281 per year from the prior quarter. The household savings rate remained at 5.2% -- up substantially from the prior quarter's 4.7% rate.

For this revision the BEA assumed an annualized deflator of 1.30%. During the same quarter (July 2015 through September 2015) the inflation recorded by the Bureau of Labor Statistics (BLS) in their CPI-U index was slightly negative (dis-inflationary), at -0.37%. Over estimating inflation results in pessimistic growth rates, and if the BEA's "nominal" data was deflated using CPI-U inflation information the headline number would show a much better +3.68% growth rate.

Among the notable items in the report :

-- The headline contribution from consumer expenditures for goods was +1.08% (up +0.03% from the previous estimate, but down -0.12% from the prior quarter).

-- The contribution to the headline from consumer services weakened slightly to +0.96% (down -0.04% from the earlier estimate and -0.27% from the second quarter). The combined consumer contribution to the headline number was +2.04%, down -0.39% from 2Q-2015.

-- The headline contribution from commercial private fixed investments was revised upward to +0.60%, up +0.06% from the previous report but still down -0.23% from prior quarter.

-- As mentioned above, inventories were again revised downward -- now subtracting -0.71% from the headline number instead of the -0.59% previously reported. As we have mentioned a number of times, this number should be largely ignored.

-- Governmental spending added +0.32% to the headline (nearly unchanged, and down -0.14% from the prior quarter). The reported growth was almost entirely in state and local spending.

-- The contribution to the headline number from exports (+0.09%) was less than in the previous report, and less than a sixth of the +0.64% recorded for 2Q-2015.

-- Imports subtracted slightly more from the headline number (-0.35%) than in the previous estimate.

-- The "real final sales of domestic product" is now reported to be growing at a +2.70% annualized rate, up slightly from the +2.66% in the previous estimate. Once again, this is the BEA's "bottom line" measurement of the economy and it excludes the reported inventory contraction.

-- Also as mentioned above, real per-capita annual disposable income was reported to have grown materially during the quarter and the household savings rate also improved substantially. However, it is important to keep this improvement in perspective. Real per-capita annual disposable income is up only +4.28% in aggregate since the second quarter of 2008 -- a meager annualized +0.58% growth rate over the past 29 quarters.

The Numbers, As Revised

As a quick reminder, the classic definition of the GDP can be summarized with the following equation :

GDP = private consumption + gross private investment + government spending + (exports - imports)

or, as it is commonly expressed in algebraic shorthand :

GDP = C + I + G + (X-M)


In the new report the values for that equation (total dollars, percentage of the total GDP, and contribution to the final percentage growth number) are as follows :

The quarter-to-quarter changes in the contributions that various components make to the overall GDP can be best understood from the table below, which breaks out the component contributions in more detail and over time. In the table below we have split the "C" component into goods and services, split the "I" component into fixed investment and inventories, separated exports from imports, added a line for the BEA's "Real Final Sales of Domestic Product" and listed the quarters in columns with the most current to the left :

Summary and Commentary

The revisions offered in this report were minimal and certainly not statistically significant. The most material revision was provided by the volatile, flaky and ultimately zero-reverting inventory data. If we had to ignore the noise and provide some "take aways" from this report, they are probably as follows:

-- In general, the economic growth provided by consumer spending is reported to be softening -- although the data on consumer spending for services has arguably become less reliable as a direct consequence of Obamacare.

-- The quarter-to-quarter increase in the household savings rate (to 5.2%) goes a long ways towards explaining the ongoing weak retail sales. Household monies that are no longer being spent at the gasoline pump are simply being saved. This implies that households are not particularly confident when looking forward.

-- Once again the contribution of exports to the headline number is a mere one-sixth what it was in the second quarter. The soaring dollar and plunging global economy have likely caught up with US exporters. In coming quarters we may look favorably back on a time when exports provided any growth at all.

-- The core domestic economy seems to be transitioning to (at least) slower growth, with exports leading the way.

-- The arguably high "deflators" utilized for this report may have skewed the headline number downward. For this reason alone it is possible that the real economy may have been performing better than these numbers would lead us to believe.

There was probably nothing of consequence in this report : none of the reported revisions were statistically significant, and -- based on historical precedence -- all of this data will be materially revised next July.

That said, we look forward to data coming in the new year that will be much more interesting.

Consumer Metrics InstituteTM
Home of Daily Consumer Leading Indicators

http://www.consumerindexes.com

© 2015 Copyright Consumer Metrics Institute - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules