Keeping you up to date on the latest data releases.
Real GDP in the third quarter was knocked down again, slipping down to an annualized growth rate of 1.8 percent, according to the third estimate from the Bureau of Economic Analysis (BEA). This is 0.2 percentage points (pp) below the second estimate. On a year-over-year basis, real GDP is up 1.5 percent, continuing to retreat from its recent high of 3.5 percent in 2010:Q3. Perhaps the most important aspect of today’s release is that personal consumption expenditures were revised down from a 2.3 percent gain to 1.7 percent in the third quarter. Yesterday’s Quarterly Services Survey tipped us off to the possibility of a sharp downward revision in hospital services consumption that could effect the BEA’s estimate for services growth, and that’s pretty much what happened. Services consumption was revised down a full percentage point to 1.9 percent, causing much of the overall downward revision.
On a brighter note, goods consumption (both durables and nondurables) was nudged up slightly and is now estimated to have increased 1.4 percent in the third quarter, compared to a 1.6 percent decline in the second quarter. Still, overall consumption is now trending at a 4-quarter growth rate of 2.0 percent, below its recent high of 3.0 percent at the end of 2010. Revisions to other broad expenditure categories were modest at best. The largest revision outside consumption was to the change in private inventories, which was revised up and is now estimated to have subtracted roughly 1.4 percentage points from real GDP growth in the third quarter, compared to a 1.6 percentage point take-away according to the second estimate. Due to the downward revision to consumption, real final sales (GDP less the change in private inventories) were revised down from a 3.6 percent increase to a 3.2 percent gain in the third quarter. This is still its largest quarterly gain of the year, and marked acceleration from a 1.6 percent increase in the second quarter. However, another alternative measure of output growth—real Gross Domestic Income (GDI), which is calculated from the income-side of the NIPAs—belies the relative (though downwardly revised) strength in final sales. Real GDI rose just 0.3 percent in the third quarter and is up just 1.1 percent over the past year.