Q3 GDP Estimate Beats Expectations As Government "Consumption" Soars

Tyler Durden's picture


Moments before this morning's first look at the Q3 GDP print came out we tweeted the following:

Sure enough, the preliminary look at Q3 GDP just came out and "beat" expectations of a 1.8% print, with a 2.0% reading (or just in line with stall speed, a number which previously has been indicative of recessions). So far so good, but as with every other pre-election economic data point out of the government, one has to look behind the headline to get the true picture. And the details are, as expected, ugly. Because of the 2.02% annualized increase in GDP, over one third, or 0.71% (compared to a deduction of -0.14% in Q2, and 0.64% of the 0.71% came from defense spending), was contributed by "Government Consumption."  This was the biggest rise in government spending in 3 years, and only the first contribution by Uncle Sam to its own GDP print since Q2 2010. So in much the same way as the September jobs print soared courtesy of government employee hiring, this same government is now juicing its own numbers to make itself look better. The real question is what the second and third Q3 GDP revisions will show, which both come, luckily, after the election. Recall that Q2 GDP initially came out at 1.5%, then was revised to 1.7%, until finally coming to rest at 1.25%.

And in other news, Personal Consumption: the key driver for real economic growth, rose 2.0% in Q3, missing expectations of a 2.1% increase.

Source: Chinese Department of Truth BEA

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Fri, 10/26/2012 - 08:44 | 2921041 slaughterer
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ObamaPhones, ObamaPads, ObamaEBTs save the day!

Fri, 10/26/2012 - 08:47 | 2921048 GetZeeGold
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You forgot Obamabonds.

Fri, 10/26/2012 - 08:56 | 2921082 slaughterer
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Government is buying the country out of the recession.  Yeah!  /sarc

Fri, 10/26/2012 - 09:14 | 2921145 icanhasbailout
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Invisible hand of the market looked at those numbers and flipped Obama the bird

Fri, 10/26/2012 - 10:56 | 2921513 asteroids
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The GDP number is something that like the "un"employment number that is obviously being manipulated. Come to think of it GDP is a terrible measure of economic performance.

Fri, 10/26/2012 - 10:01 | 2921277 Translational Lift
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- Steve Goldstein ; 415-439-6400; AskNewswires@dowjones.com One reason GDP came in a bit stronger than forecasts was the strength in federal government expenditure. According to BNP Paribas economists, what really was going on was an increase in defense maintenance costs, which in fact was estimated by the government; this data will likely be revised in the future.


The curtain was pulled back from this empty administration when the current (sic) POTUS, teleprompterless, appeared before the American people at the first debate and showed just what an empty suit he is.

Fri, 10/26/2012 - 11:10 | 2921571 Overfed
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Don't forget the spending required to equip all of those new Sturmabteilung recruits!

Fri, 10/26/2012 - 08:47 | 2921050 malikai
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Now with 100% less absorbtion.

Fri, 10/26/2012 - 08:50 | 2921060 Atlasshruggedme
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Perfect... never thought of the ObamaPad... Everyone needs to be able to access the internets with a pad. Not one of the cheap pads.. a Ipad4

Fri, 10/26/2012 - 09:37 | 2921210 adr
adr's picture

I guess you didn't hear about the city of Cleveland Heights giving iPads to students.

Shortly after many of them were "stolen" requiring replacements.

The school system is about 85% black. So there you go Obamapads to go with the Obamaphones everyone in Cleveland gots.

Fri, 10/26/2012 - 09:05 | 2921114 LongSoupLine
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Cramer says, "The numbers are good."

No further commentary required other than...



Fri, 10/26/2012 - 09:05 | 2921115 ejmoosa
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Don't forget the Government Motors movement of vehicles...more than 79% went to the government last month.

Fri, 10/26/2012 - 09:57 | 2921265 spastic_colon
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I like the way everyone forgets that "government spending" means they used your "tax dollars" to game the system....now who outspent who?  fraud maybe?

Fri, 10/26/2012 - 08:44 | 2921042 Cassandra Syndrome
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What was the GDP Deflator?

Fri, 10/26/2012 - 09:14 | 2921141 Acet
Acet's picture

+1 This

GDP numbers are calculated after removing the effects of inflation. The factor that reduces the GDP numbers to account for inflation is the GDP Deflator which is derived from official inflation numbers.

In simple terms, the higher the official inflation numbers, the higher the GDP Deflator and thus the lower the GDP numbers.

Fudge the Inflation numbers down and you've just fudged the GDP numbers up. I suspect that the US' positive GDP growth numbers of the last 5 years are all thanks to little-more-than-made-up-on-the-spot inflation numbers (for example, US inflation numbers don't include Food or Housing).

Fri, 10/26/2012 - 09:21 | 2921163 Winston Churchill
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Dive, dive, dive.

 Govt.Stats in the water.

Fri, 10/26/2012 - 10:07 | 2921305 Bay of Pigs
Bay of Pigs's picture

But Orly says there's no inflation if wages arent rising.

Hard to believe some of the outrageous bullshit and economic heresy written these days.

Fri, 10/26/2012 - 08:46 | 2921045 john_connor
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aggregate demand, bitchezz.


//sarc off

Fri, 10/26/2012 - 09:19 | 2921159 Manthong
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On the radio this morning regarding the positive GDP report:

“bouyed by consumer and defense spending”

The best of both worlds, I guess.

Fri, 10/26/2012 - 09:29 | 2921188 GeezerGeek
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I misread it. I thought it said "consumer defense spending". Long Ruger.

Fri, 10/26/2012 - 08:47 | 2921046 Shizzmoney
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When in doubt, just say the government "consumed" to get that GDP number up.


The number is irrelevant for today's economic world, anyways.  It's only existence is for policy wonks and stock/bond traders. 

We could have GDP at 5% and things would still be shitty. 

The economic problem we have isn't a macro problem; it's a micro problem (fraud).

Fri, 10/26/2012 - 09:00 | 2921086 toomanyfakecons...
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Exactly... a mirco problem... nothing a few dozen prison buses, paddy wagons, and some Federal Marshalls couldn't clean up in a few days time... http://tinyurl.com/cd5cyjo/

Fri, 10/26/2012 - 08:47 | 2921047 Stackers
Stackers's picture

Where's a death star to build when you need one ?

Fri, 10/26/2012 - 08:56 | 2921078 toomanyfakecons...
toomanyfakeconservatives's picture

Tarkin: Princess Leia, before your execution, I'd like you to join me for a ceremony that will make this battle station operational. No star system will dare oppose the Emperor now.

Leia: The more you tighten your grip, Tarkin, the more star systems will slip through your fingers.

Tarkin: Not after we demonstrate the capabilities of this station.

Fri, 10/26/2012 - 08:48 | 2921051 BurningFuld
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Well just wait until Mittens takes over. Cutting 20% of the Country's employees to improve the balance sheet is nothing for Mittens.  Watch out!

Fri, 10/26/2012 - 11:02 | 2921476 GetZeeGold
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Just shows Mitt has compassion......cause we don't actually need half of them.

Fri, 10/26/2012 - 11:14 | 2921582 Overfed
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If I thought Willard would cut 20% of federal employees right off the bat, I'd acutally vote for him. But we all know that ain't gonna happen.

Fri, 10/26/2012 - 08:49 | 2921056 Moneyswirth
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Obama is playing this perfectly.  He might just scam his way into re-election. 

Fri, 10/26/2012 - 08:49 | 2921058 I Am Not a Copp...
I Am Not a Copper Top's picture

Just as I feared, the reversal in AAPLZN - Check.  The miraculous GDP beat - Check.  The 30 point ES ramp to miraculaously close green on the week - Coming to a theatre near you.  BTFD Bitchez.  Motherfuckingcocksuckers.  Fuck you Bernanke.

Fri, 10/26/2012 - 08:54 | 2921075 Boilermaker
Boilermaker's picture

Joe Lunchbox only reads the headline.

Get used to this Goerbels shit.  It ain't stoppin' now.

Fri, 10/26/2012 - 09:33 | 2921201 Richard Chesler
Richard Chesler's picture

Might be a better idea to STFP.


Fri, 10/26/2012 - 08:56 | 2921081 fonzannoon
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Hang in there. The bullshit just stinks too much to ignore lately. Everyone knew Obama and Ben had come too far to quit at the finish line.

Fri, 10/26/2012 - 09:32 | 2921199 GeezerGeek
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And Obama had the audacity to call Romney a bullshitter!

Fri, 10/26/2012 - 09:39 | 2921217 Orly
Orly's picture

Not going to happen today, I am afraid.  Consumer sentiment numbers will be in the tank and the SPX will sell off for the rest of the day and won't stop until late Tusday afternoon.

Or not.

Fri, 10/26/2012 - 08:50 | 2921061 Cursive
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Recall that Q2 GDP initially came out at 1.5%, then was revised to 1.7%, until finally coming to rest at 1.25%


If ther is this much volatility in one metric - the same metric being revised twice and in different directions - why would any rational person put any faith in econometric data.  I have my own eyes and this economy is in the shitter.

Fri, 10/26/2012 - 09:35 | 2921204 GeezerGeek
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This GDP number is for electioneering. Do you honestly think most of the supporters of Obama are rational persons?

Fri, 10/26/2012 - 08:50 | 2921063 Water Is Wet
Water Is Wet's picture

Don't worry people.  Amazon is up $5 this morning.

Fri, 10/26/2012 - 08:51 | 2921065 Boilermaker
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ES positive.

PHEW >>>patting forehead with wet cloth<<<<

Fri, 10/26/2012 - 09:17 | 2921152 fuu
fuu's picture

<pats head with brick wall>

Fri, 10/26/2012 - 08:52 | 2921067 Martdin
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Let'er rip!

Fri, 10/26/2012 - 08:52 | 2921068 machineh
machineh's picture

This was the biggest rise in government spending in 3 years, and only the first contribution by Uncle Sam to its own GDP print since Q2 2010. 

It's called 'get out the vote spending' ... a/k/a 'walking-around money.'

Your tax dollars at work!

Fri, 10/26/2012 - 08:53 | 2921069 Wakanda
Wakanda's picture

Government consumption:  hollow point bullets for every department

The Second American Revolution, unfolding now in a gerrymandered voting district near you.

Fri, 10/26/2012 - 08:54 | 2921070 ShortTheUS
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Q3 GDP Estimate Beats Expectations As Government "Consumption" Soars

Keynseian multiplier, BITCHEZ!!!!


Fri, 10/26/2012 - 08:53 | 2921071 Quinvarius
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k+3.  Kaminskied!

Fri, 10/26/2012 - 08:55 | 2921079 Oldwood
Oldwood's picture

Its just a perspective problem. If we were to look at unemployment in a different way and suggest that a high number actually meant that our economy was doing great because it indicated that we are so prosperous that fewer people actually need to work now, Obama would be our hero! I'm sure with very little effort we can apply this attitude to all off our metrics. We are just looking at things wrong. The high cost of food is good as it helps stem the obesity problem, just like the high cost of fuel incentivizes us to stay at home and not pursue employment. See, its not that hard!

Fri, 10/26/2012 - 08:56 | 2921080 kaiten
kaiten's picture

Wait for the third revision for real numbers.

Fri, 10/26/2012 - 09:06 | 2921107 Water Is Wet
Water Is Wet's picture

lol, no GDP number is a real number.  You can't trade it in for cash.  You can't use it as collateral for a loan.  It can't be verified.  It's always just a bullshit number for propagandizing the people.

Fri, 10/26/2012 - 08:56 | 2921083 Fedaykinx
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*subject to revision

Fri, 10/26/2012 - 08:58 | 2921085 GolfHatesMe
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Does anyone know if all of the states were counted?

Fri, 10/26/2012 - 09:06 | 2921120 HD
HD's picture

Yes. Some counted twice...

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