3rd Quarter GDP Grew at a 3.4% Rate Because Inventories Grew at a 31.9% Rate

The Third Estimate of our 3rd Quarter GDP from the Bureau of Economic Analysis indicated that our real output of goods and services increased at a 3.4% annual rate in the quarter, revised from the 3.5% growth rate reported in the second estimate last month, as growth in personal consumption, fixed investment, and exports were revised lower, even as the change in our inventories was a greater addition to GDP than in the 2nd estimate.

Factory Orders Increase 1.2% for January

The Manufacturers' Shipments, Inventories, and Orders report shows factory new orders increased by 1.2% for January.  That's after December new orders rose by 1.3%.  Durable goods new orders by themselves was revised to 2.0% from 1.8%.  Transportation new orders were the monthly increase leader with a gain of 6.2%.  This is after transportation equipment new orders had declined for two months.

Q4 GDP A Bumbling 1.9%

The GDP initial estimate reports a weak 1.9% economic growth for the 4th quarter.  Imports really hammered GDP, just in time to validate now President Trump.  Consumer spending was lower while changes in private inventories added a full percentage point to Q4 GDP.  Generally speaking this report shows just how much imports can slow economic growth.  U.S. Exports curtailed and as a result, -1.7 percentage points of GDP were lost in Q4.

Factory Orders Up But Durable Goods Decreased For September

The Manufacturers' Shipments, Inventories, and Orders report shows factory new orders increased by 0.3% for September.  That's after August new orders rose by 0.4%.  Durable goods new orders by themselves was revised down to -0.3% for September, but increased 0.2% in August.  Transportation new orders were the worse, with a -1.1% decline.

Q3 GDP Comes In At 2.9%

The GDP initial estimate reports a solid 2.9% economic growth for the third quarter.  Trade exports and private inventories accelerated in Q3.  Consumer spending was home hum, although durable goods consumer spending dramatically increased.  Residential investment declined for the quarter.  While a nice report, GDP is always revised and this is just the initial release.

Another Bad Month for Factory Orders

The Manufacturers' Shipments, Inventories, and Orders report shows factory new orders declined by -1.5% for June.  That's after May new orders decreased by -1.2%.  Durable goods new orders by themselves plunged by -3.9% for June after an May -2.9% decrease.  That ain't good folks.  Transportation new orders plunged by -10.5% as nondefense aircraft and parts dropped by -58.8%.

While Q2 GDP Is Bad News, the Revisions are Worse

The first Q2 GDP estimate shows a surprising sputtering 1.2% of economic growth.  That is a much weaker second quarter than most expected as investment declined -9.7% from the first quarter and the price index was much higher.  Worse, GDP was revised for 2016 Q1 back to 0.8%.  GDP for years 2015, 2014 and 2013, were all revised higher.  Yet since Q2 2015, quarterly GDP was revised lower, showing quite the sluggish slowdown going on for at least a year.

Q1 2016 GDP Revised Upward to 1.1%

Q1 GDP was revised upward to 1.1%.  Originally GDP was estimated to be 0.5%, then revised up to 0.8% and now reported to be 1.1%.  While consumer spending was revised somewhat lower again, exports came to the rescue and bumped up Q1 GDP.  Private investment contraction was less than originally estimated as well.  Now GDP is still weak but not anything to be concerned about.  Seems revisions always change the economic growth story and Q1 is no exception.