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Q3 GDP Roars To 2.8% Despite Weakest Consumer In Over Two Years

Tyler Durden's picture




 

A day of fireworks that started with the stunner by Goldman's head of the ECB has just gotten its second wind following the preliminary announcement of Q3 GDP, which roared from 2.5% to 2.84%, far above expectations of a 2.0% annualized number.

On the surface this was a bad number for Taper watchers, as it may mean the Fed will actually have to moderate its monthly flow precisely at the time when the ECB was forced to do "whatever it takes" in its fight with inflation, however a quick look at the internals shows that once again there is much more than meets the eye: because while the headline print was the strongest since Q3 2012, the core driver of economic growth, Personal Consumption, grew 1.5% below the expected 1.6%. Specifically, of the 2.84% number, PCE was just 1.04%, the lowest since Q2 2011!

Elsewhere, fixed investment - an indication of capex -  was just 0.63%, below the 0.96% reported last quarter. So what drove "growth"? Why the traditional hollow component: Inventory, which amounted to 0.83% of the 2.8% print, double the 0.41% in the prior quarter. Net trade added an additional 0.3%, and finally government ticked on a modest 0.04% - the first positive contribution since Q3 2013.

In short: a little in here for everyone, with the market bulls happy to point out that the US consumer is the weakest he has been in over two years, while economist happy to highlight that the US economy is, in fact, growing at a brisk pace.

 

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Thu, 11/07/2013 - 09:50 | 4130453 HedgeAccordingly
HedgeAccordingly's picture

Well at least the bond traders were 'positioned' ahead of time. http://hedge.ly/16DAaWW

Thu, 11/07/2013 - 09:52 | 4130459 King_of_simpletons
King_of_simpletons's picture

Proof that QE is working. More QE = More GDP.

Thu, 11/07/2013 - 09:55 | 4130475 Stuart
Stuart's picture

I sell less, so inventory builds up.  Sure, that sounds like economic growth:  Retards.  Corruption never wastes an opportunity to game the market, i.e. game all the participants like you.   

 

Thu, 11/07/2013 - 09:58 | 4130494 yogibear
yogibear's picture

Because they cooked the stats and said it's better. More of liten to what I say, not reality.

Thu, 11/07/2013 - 10:10 | 4130563 NoDebt
NoDebt's picture

That's why they call it's Gross National PRODUCTION, not Gross National Sales or Gross National Deliveries.

Pack 'em, stack 'em and rack 'em.  Plenty of Chevy Volts on the lot.

Reminds me of an old story back when "bradband" internet access as just becoming widely available.  Phone companies were offering something called an ISDN line.  Nobody was signing up for it.  The joke in the industry was that ISDN stood for "I Still Don't Need it."

Thu, 11/07/2013 - 11:03 | 4130800 tarsubil
tarsubil's picture

The one constant seems to be an increase in Personal Consumption Expenditures. Would this include all the free money being spent by the ultra-rich banksters? 

Thu, 11/07/2013 - 12:44 | 4131295 Singelguy
Singelguy's picture

Inventories grew because of the upcoming Christmas shopping season or was it too early for that?

Thu, 11/07/2013 - 09:55 | 4130483 GetZeeGold
GetZeeGold's picture

 

 

Revisions bitchez!

 

Watch those rookie mistakes.

Thu, 11/07/2013 - 10:04 | 4130530 max2205
max2205's picture

The stuff at the yard sales should be awesome in 2015!

Thu, 11/07/2013 - 11:07 | 4130824 Never One Roach
Never One Roach's picture

20 million people being thrown off their present health insurance is very Bullish for the GDP.

Thu, 11/07/2013 - 09:56 | 4130488 Headbanger
Headbanger's picture

Nope.  Moar excuse to taper on as the 10 year Treasury yield is showing:

http://www.marketwatch.com/investing/bond/10_year

Thu, 11/07/2013 - 10:10 | 4130559 Sudden Debt
Sudden Debt's picture

Whatever the US government spends... is also added to the GDP...

People should really know what GDP actually is :)

The more Obama throws through the window, THE HIGHER GDP WILL BE!!!

AND THE HIGHER THE GDP IS, THE MORE THEY CAN LOAN!!!

HAHAHAHAH

WHAT A FARCE!!!

Thu, 11/07/2013 - 09:51 | 4130458 d edwards
d edwards's picture

Don't forget-the gov't re-jiggered the method of determining GDP back in July or there abouts.

 

So it' probably more BS.

Thu, 11/07/2013 - 09:55 | 4130481 madcows
madcows's picture

Right, how much of this is atributable to blowjobs, back scratches and patronage in Washington.  Now that those "contributors" to the economy are included, I'm surprised that it didn't print at 200% growth.

Thu, 11/07/2013 - 09:57 | 4130493 Cursive
Cursive's picture

@d edwards

There is no reason to look at this number.  It doesn't tell us anything other than what the Fed/UST complex wish to project.  It's too bad the Amerikan sheeple are so easy to control.

Thu, 11/07/2013 - 10:01 | 4130513 yogibear
yogibear's picture

 "It's too bad the Amerikan sheeple are so easy to control."

Now all we need is an official statement that says the US constitution is a historical document and has no other purpose.

Heil Obama.!

 


Thu, 11/07/2013 - 09:58 | 4130501 Rainman
Thu, 11/07/2013 - 10:17 | 4130595 War_is_Peace
War_is_Peace's picture

That "re-jiggering" now includes intangibles when measuring GDP.  About $500 billion worth of intangibles, or, 3% of GDP.  Re-jiggering excluded...would the economy have actually shrunk?

Thu, 11/07/2013 - 09:52 | 4130460 fonzannoon
fonzannoon's picture

Save in bitcoin, speculate in stocks. Welcome to your future.

Thu, 11/07/2013 - 10:48 | 4130709 Non Passaran
Non Passaran's picture

Or perhaps save in bitcoin and speculate in gold, as stawks seem to be a conservative investment.

Thu, 11/07/2013 - 09:53 | 4130468 Bearwagon
Bearwagon's picture

Ludicrous speed! Now!

Thu, 11/07/2013 - 09:53 | 4130469 Tanz der Lemminge
Tanz der Lemminge's picture

The BEA's GDP tables tell us that the gross change in GDP from 2Q -> 3Q was $196.6 billion.  But the Fed's QE program injected $255 billion, so in fact the economy shrank during the 3rd quarter.

Thu, 11/07/2013 - 09:54 | 4130471 venturen
venturen's picture

Just think how good the number would be if the government was permenant laid off!

Thu, 11/07/2013 - 09:55 | 4130484 Max Damage
Max Damage's picture

Market bulls point to a weak consumer. Sort of sums the bullshit up really

Thu, 11/07/2013 - 10:05 | 4130535 Super Broccoli
Super Broccoli's picture

you don't get it, weak consumption is good new, means there is room for improvement...

Thu, 11/07/2013 - 09:56 | 4130486 TheFreeLance
TheFreeLance's picture

Holiday discounts are gonna be bananas. Hold on and buy late, folks. 

Thu, 11/07/2013 - 12:42 | 4131286 MisterMousePotato
MisterMousePotato's picture

Hold on and buy nothing.

Thu, 11/07/2013 - 09:56 | 4130487 Running On Bing...
Running On Bingo Fuel's picture

Taliban buying missile launchers and yellow cake.

Over.

Thu, 11/07/2013 - 10:01 | 4130514 Dr. Engali
Dr. Engali's picture

Intangibles bitchez! GDP is whatever they say it is.

Thu, 11/07/2013 - 11:13 | 4130762 1stepcloser
1stepcloser's picture

Dear leader's executive order, there will be no more recessions act of 2014.

Thu, 11/07/2013 - 10:03 | 4130523 yogibear
yogibear's picture

The central planners are saying "We need another war". 

Thu, 11/07/2013 - 10:04 | 4130528 Bryan
Bryan's picture

GDP is meaningless since they redefined it over and over to meet their needs.

Thu, 11/07/2013 - 10:04 | 4130533 Rodders75
Rodders75's picture

Zerohedge fucks up again. The economy does, ahem, seem to be growing. BTFATH. (no sarcasm intended).

Thu, 11/07/2013 - 10:23 | 4130613 Dr. Engali
Dr. Engali's picture

You are aware the .gov started including intangibles, or those things that can't be touched or seen, in the equarion aren't you? Another way of putting it is...GDP is what .gov says it is. Maybe I'm giving you a little too much credit.

Thu, 11/07/2013 - 10:29 | 4130638 Rodders75
Rodders75's picture

Proof please? Web link?

Thu, 11/07/2013 - 10:39 | 4130673 sbenard
sbenard's picture

Do your own research. It happened!

Thu, 11/07/2013 - 10:46 | 4130698 Non Passaran
Non Passaran's picture

What a moron!

Thu, 11/07/2013 - 11:48 | 4130984 War_is_Peace
War_is_Peace's picture

A simple google search of "us gdp intangibles" will get you a number of links.  It happened back in July.

 

Critical thought, friend.  It's a liberating senstation.

 

 

Thu, 11/07/2013 - 12:36 | 4131272 Rodders75
Rodders75's picture

Gee, these newfangled things called "the internets" and "the google" are difficult to get a grip on for luddites like me. But someone a bit more advanced than me (who no doubt is buying Twitter at $49) did show me these links:

http://www.shadowstats.com/alternate_data/gross-domestic-product-charts

http://ftalphaville.ft.com/2013/07/31/1587102/a-guide-to-the-conceptual-us-gdp-changes/

Thank you for advising me on thinking processes. My Oxbridge education was obviously wasted and I wish you had been around to tell me this 20 years ago.

But, "friend", "sensation", is not spelt the way you think. Correct your spelling, it is also liberating.

 

Thu, 11/07/2013 - 10:08 | 4130548 the not so migh...
the not so mighty maximiza's picture

Its roaring so much everyone around the world will start selling all their dollars soon.

Thu, 11/07/2013 - 10:15 | 4130581 Common_Cents22
Common_Cents22's picture

gee, building some inventory for Christmas sales.   If the weak consumer numbers continue, we are set up for a nice whipsaw Christmas season.

 

Obama will have to start a christmas present welfare system, guaranteeing the 47% of Americans sucking on Govt teats 10 presents each, courtesy of taxpayer.   Amazon will gladly help with all the taxpayer funded sales and delivery.

 

Of course the govt doesn't want to make you look emasculated, they'll throw in another 10 presents each to give away to your family and friends.

Thu, 11/07/2013 - 11:10 | 4130842 adr
adr's picture

There has been no building of Christmas inventory this year. Retailers are creating artificial scarcity to hopefully drive sales. If people believe they can't get a product they will rush to get it.

If Macy's, Best Buy, Target, Walmart, etc have another holiday season like last year where they needed to put half the inventory at 50% off to get rid of it, they will be insolvent.

JC Penney is already dead. People forget that they still haven't paid vendors for product all year. They negotiated pay on scan terms because the vendors don't want the product back, there is nowhere they can sell the inventory to.

Thu, 11/07/2013 - 10:16 | 4130590 1stepcloser
1stepcloser's picture

Organic Real growth will be the undoing of this sham.  Interest Rates will go up, showing Government is insolvent.  How much would interest payments be on a ten year at  5 or 6% ?  Debt trap like mofo yo... Keep stacking..

Thu, 11/07/2013 - 10:27 | 4130631 mtremus
mtremus's picture

BTFD - Between today and tomorrow 6 billion in new POMO

So dam the torpeodos and full speed ahead

Up up and away, at least for now

 

Thu, Nov 07, 2013 Fri, Nov 08, 2013 Outright Treasury Coupon Purchases 02/15/2036 - 08/15/2043 $1.25 - $1.75 billion Fri, Nov 08, 2013 Tue, Nov 12, 2013 Outright Treasury Coupon Purchases 08/15/2018 - 07/31/2019 $4.75 - $5.75 billion
Thu, 11/07/2013 - 10:31 | 4130632 mtremus
mtremus's picture

 

Thu, Nov 07, 2013 Fri, Nov 08, 2013 Outright Treasury Coupon Purchases 02/15/2036 - 08/15/2043 $1.25 - $1.75 billion Fri, Nov 08, 2013 Tue, Nov 12, 2013 Outright Treasury Coupon Purchases 08/15/2018 - 07/31/2019 $4.75 - $5.75 billion
Thu, 11/07/2013 - 10:43 | 4130663 sbenard
sbenard's picture

Thank goodness for all those "intangibles" they add in since the August revision to the way they calculate GDP. Have we so quickly forgotten that change?

When they introduced "intangibles" to the equation, it caused 2Q GDP to leap by 50%. If that same calculation holds true on this figure, then the real GDP should be closer to 1.85%. That's NOTHING to crow about!

Thu, 11/07/2013 - 11:05 | 4130818 adr
adr's picture

Who the fuck downvoted you for the truth.

We really are in Orwell's nightmare.

The truth police are out in full force.

Thu, 11/07/2013 - 10:50 | 4130715 orangegeek
orangegeek's picture

such fucking bullshit

 

GDP this!!!!

Thu, 11/07/2013 - 11:04 | 4130804 Freewheelin Franklin
Freewheelin Franklin's picture

I don't even know what GDP is anymore. Is it the number of seahorses in Bernanke's knickers?

Thu, 11/07/2013 - 11:04 | 4130806 adr
adr's picture

I just thought up an awesome new product last week, I even designed it and made a rapid prototype model of it.

It isn't for sale yet, but I believe it can sell 100 million units at $100.

ADD $10 BILLION TO GDP.

I have thought experiments all the time, producing all sorts of products. R&D that's worth billions if the products are produced.

I AM A ONE MAN GDP MACHINE!!!!!!

Elon Musk, HA. He's thought of what, four products in the past year. I've come up with thousands.

Well it is my job and I get paid for it. Since it's in GDP now, I need to demand to be paid for all the intangibles I wasn't getting paid for before. Since they backdated the intangible GDP to the early 1900s, I WANT 20 YEARS OF BACK PAY!!!!!!

Thu, 11/07/2013 - 11:08 | 4130832 Winston Smith 2009
Winston Smith 2009's picture

Bullshit.  The GDP didn't "roar" anywhere.  You need to subtract what was spent into the economy with QE:

 

3Q GDP DECREASED $58.4 Billion

http://market-ticker.org/akcs-www?post=225788

Excerpt:

The Fed is "creating" $85 billion a month in "QE", injecting it into the economy.  These funds are immediately spent and thus "count" in GDP (all goods and services sold, remember?)

So the actual amount of economic activity for which trade occurs must have the QE amount subtracted back out.

The BEA's GDP tables tell us that the gross change in GDP from 2Q -> 3Q was $196.6 billion.  But the Fed's QE program injected $255 billion, so in fact the economy shrank during the 3rd quarter.

When people tell you that they believe the economy is in a recession, as a recent survey said was commonly believed -- they're right.

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