Unassuming  GDP Report

Last Month the Annualized GDP was reported at 3.5%. This month the final revisions for the third quarter is 3.4% This is Still a higher third quarter annualized GDP than we had during 2006 through 2013, and from 2015-2017. So what was revised?

The Quarter to Quarter GDP data, the annualized data, was revised from 3.5% to 3.4% annualized growth. Personal consumption expenses (PCE) saw the “Goods” data revised lower from 4.8% to 4.3% and “Services” revised slightly higher that the preliminary version from 3.1% to 3.2% . Gross Private Domestic Investments (GPDI) were revised higher from 15.1% to 16.2%

Exports were revised lower and Imports were revised higher than last reported. This reduces the GDP. Imports matter. The Strength of the dollar matters. A stronger dollar makes imports less expensive and exports more expensive. Non-defense government spending was revised slightly higher than last reported, and did not have an impact on the overall Government Consumption Expenditures (GCE.)

The Same Quarter Annual Growth rate was unchanged at 3.0%. We have had upward momentum for the past nine quarters and have experienced same quarter GDP growth for 37 consecutive quarters. An article in Barron’s Magazine indicates that this growth streak should continue through 2019 and 2020. They are not expecting the Bull Market to End until 2020.

The Revisions to the Same Quarter was similar to the Annualized data, differed in magnitude. PCE was revised down from 3.0% to 2.9%. This doesn’t make sense in light of the MARTS retail sales data last month or the CPI inflation data. GPDI was revised up from 6.0% to 6.1%. Exports were revised down from 3.6% to 3.5%. Imports were revised down from 2.0% to 1.8%. This should have boosted the same quarter GDP. GCE bumped higher from 2.2% to 2.3%

The quarter to quarter data was one of the best third quarters that we have had since 2005. The same is true for the same quarter data. Fourth quarter is often lower than third quarter for the quarter to quarter growth. It is possible that the downward revision to the quarter to quarter growth will give the fourth quarter a modest boost. Next quarter should show same quarter growth over 3.0% based on PCE and GCE. We are a consumption economy.  Stay tuned for the advance fourth quarter data that will be released in a month. Jingle Bells at the cash register from Christmas sales may spike the quarter to quarter GDP, too.

It’s the economy.