Final Q3 GDP Prints 3.1% - Government, Inventories Account For Half; Fixed Investment Negligible
Moments ago the BEA released the final Q3 GDP number, which printed at 3.1%, up from the second GDP guesstimate 2.7% reported last month, the first 3%+ print since Q4 2011 when, just like today, everything was coming up roses and when growth was on the horizon. Sadly, just like then, reading between the lines reveals more of the same disappointing components, with nearly half of the entire 3.1% annualized growth being derived from Government (0.75) and Inventories (0.73%), combined adding 1.48% (more than in the second revision) of the 3.1% print. Annualized Personal Consumption as a portion of the final number rose modestly from 0.99% to 1.12%, but still is well below the 1.42% in the first Q3 GDP estimate. It is this number that will be closely watched once the preliminary Q4 GDP number is released in a one month. Recall that Q4 GDP is currently tracking between 0.5% and 1.5% depending who you ask. Finally, the most important real growth factor for the US economy - fixed investment - remained stubbornly flat, at a mere 0.12%, virtually unchanged from the first revision's 0.10%. In other words, in Q3 companies stubbornly refused to invest in capital investment i.e. CapEx, and will continue to do so as long as the Fed makes "investing" in dividends and buybacks a more rewarding option. Expect the same pattern to continue in Q4 only this time the Sandy and Fiscal Cliff excuses will be espoused by all the economic apologists.