GDP

Durable Goods, Inventories and Q3 GDP

The Durable Goods, advance report shows new orders decreased by -2.0% for October 2013 after a 4.1% increase in September.   The decline was mainly aircraft as transportation durable goods new orders by themselves dropped -5.9%.  Without transportation orders, which aircraft is a large part, durable goods new orders fell by -0.1%.  We also estimate Q3 GDP will be revised upward to 3.2% on inventories.

 

September's 8.0% Trade Deficit Increase Should Lower Q3 GDP

The U.S. September 2013 monthly trade deficit jumped from last month with a 8.0% increase and now stands at -$41,778 billion.  The jump in the trade deficit should lower Q3 GDP upon the next revision.  We estimate the September trade deficit will lower Q3 GDP by 0.3 percentage points.

GDP 2.8% for Q3 2013

Q3 2013 real GDP came in at 2.8%  Changes in business inventories saved the day as did less of an increase in imports.  Fixed investment also increased.   Government spending declines were about the same as Q2, yet local governments increased spending.  Consumer spending was less growth than Q2, only about 37% of this quarter's GDP.

Q2 2013 GDP Revised Upward to 2.5% on the June Trade Deficit Shrink

Q2 2013 real GDP was revised significantly upward to 2.5% from the 1.7% originally reported   The revision gain was almost all a reduction in the trade deficit as we predicted earlier.  The shrink in the trade deficit alone added 0.8 percentage points to Q2 GDP, a welcome change.  Unfortunately this is a fluke.

The Revisionist National Income And Product Accounts

The Bureau of Economic Analysis has revised the National Income and Product Accounts all the way back to 1928.  With the release of Q2 GDP, Gross Domestic Product magically added $559.8 billion to 2012 GDP in current dollars.  Additionally the chained dollar base year was changed from 2005 to 2009, a very funky year where some deflation from 2008 was still present.

Trade Deficit Dramatic Shrink Will Boost Q2 GDP

The U.S. June 2013 monthly trade deficit cliff dove -22.4% from last month to $34.2 billion.  This is the smallest trade deficit since October 2009 when the world was plunged into a global recession.  A combination of a dramatic drop in oil imports along with solid U.S. exports in fuel oil, capital goods and jewelry was the reason for the deficit decline.  Q2 GDP should be revised upward past 2.0% as shown below.

GDP 1.7% for Q2 2013

Q1 2013 real GDP came in at 1.7%   Q1 GDP was revised down to 1.1%.   Government spending declines were much less of a drag on the economy than Q1 while imports sucked out -1.51 percentage points of economic growth.   Exports did recover but were about half of what imports subtracted from GDP.  Investment grew on across the board increases.   Consumer spending decreased slightly from Q1.  Generally speaking 1.7% GDP implies fairly weak economic growth, the third quarter in a row for GDP below 2.0%.

GDP Revised Down to 1.8% for Q1 2013

Q1 2013 real GDP was revised downward to 1.8% from 2.4%.   This is fairly bad news, as fourth quarter 0.4% GDP already showed a stagnant economy.   The revisions were so extensive it is like reading a different report.  Consumer spending was the biggest downward revision followed by significantly less exports than originally reported.

GDP Revised Down Slightly to 2.4% for Q1 2013

Q1 2013 real GDP was revised downward slightly to 2.4% from 2.5%.   This is still an improvement, from the fourth quarter 0.4% GDP showing a stagnant economy.   Consumer spending was the biggest improvement while increased imports posed a major economic drag.  Government spending declines continue to be an economic damper.  The revision shows more consumer spending than originally reported, less investment, less imports, less exports and government expenditures were less than previously estimated.  Generally speaking a 2.4% GDP implies moderate economic growth, yet overall real demand in the economy is still fairly weak.

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