Keeping you up to date on the latest data releases.
Real GDP in the third quarter was revised down from 2.5 percent to 2.0 percent, pulling its four-quarter growth rate down 0.1 percentage points (pp) to 1.5 percent, according to the second estimate from the Bureau of Economic Analysis (BEA). The 0.5 pp headline knock-down in the third quarter looks a lot worse on the surface than the details would suggest. Importantly, the estimate of real final sales of domestic product (GDP less inventories) was untouched during the revision and still stands at 3.6 percent, compared to a gain of just 1.6 percent in the second quarter. The bulk of the downward revision came as the change in private inventories was adjusted down from a $5.4 billion increase to an $8.5 billion decline, which subtracted an additional 0.5 pp from real GDP growth during the quarter. Swings of this magnitude are fairly common because the BEA has scant current-quarter evidence on inventories at the time of the advance estimate and it relies heavily on extrapolating near-term trends. Elsewhere, the growth rate in real consumption was nudged down from 2.4 percent to 2.3 percent, shaving off a tenth of a percentage point (pp) from its, still sizable, 1.6 pp contribution to real GDP growth. Nonresidential fixed investment was revised down slightly—from a 16.3 percent jump up to a 14.8 percent gain in the third quarter, still above its 4-quarter growth rate of 8.9 percent. Residential investment was essentially unrevised, and so was real government consumption (which remained flat). Real exports were actually revised up slightly during the revision—from 4.0 percent to 4.3 percent—despite continued angst from across the pond. Also, real imports were revised down from 1.9 percent to 0.5 percent in the third quarter, though since they enter into GDP accounting as a subtraction, this added nearly 0.3 pp to output growth. Perhaps the only worrisome news in this report is the first look at real GDI (gross domestic income). Real GDI rose just 0.4 percent in the third quarter. While this is a very slight improvement from a scant 0.2 percent growth rate in the second quarter, it is down markedly from its 2010 growth rate of 2.5 percent.