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Q3 GDP Soars To 3.6% On Massive Inventory Accumulation; Consumption Contribution Lowest Since 2009
On the surface, the first revision to the Q3 GDP print, which initially came at 2.8%, was tremendous: at 3.6% well above the 3.1% expected, nothing could be better. Unfortunately, once again reading between the lines shows that all the "growth" was completely hollow and entirely on the back of the ongoing massive inventory accumulation, which rose from 0.41% in Q2 to 0.83% in the first Q3 revision, to an epic 1.68% in the current revision, or nearly half of all the "growth" in the economy. As for the most important component of GDP - personal consumption it once again declined, and dropped from 1.24% of the GDP number in Q2 to 1.04% in the first revision, to just 0.96% in the final Q3 revision - this was the lowest consumption contribution to GDP since Q3 2009! Bottom line: the US consumer is getting ever weaker, even as retailers and producers are stocking up more and more inventory to take advantage of the lack of consumer spending power.
Of course, as the inevitable inventory liquidation takes place at cost or lower levels, expect Q4 GDP to crater, and we now see a 1% Q4 GDP as very possibly in light of this massive inventory build up in the last quarter. But since that number won't be out until early 2014, stocks are sliding because today's surge in GDP means a December taper is even more likely.
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Bullish, bitchez!
What is bullish is the new formula for determining the GDP. Who knew these 'bad times' could be morphed so completely into 'good times'.
It's all in the formula. Just like when the government throws out all the food inflation and decides to ignore the core problem.
> Who knew these 'bad times' could be morphed so completely into 'good times'.
Admittedly, I never saw it coming.
3.6%! The recovery is in full swing!
Bullish for pink slip printers.
This is my 6th or seventh rodeo.I've seen this show too many times.
A huge correction,maybe the last, next quarter.Whatever the FedRes does.
Keep your powder dry, you are going to need it.
And yet...
Profits from current production (corporate profits with inventory valuation adjustment (IVA) and capital consumption adjustment (CCAdj)) increased $38.3 billion in the third quarter, compared with an increase of $66.8 billion in the second. Taxes on corporate income decreased $4.8 billion, in contrast to an increase of $10.0 billion. Profits after tax with IVA and CCAdj increased $43.0 billion, compared with an increase of $56.9 billion.So the rate of profit growth fell, the rate of taxes collected fell, and the rate of profit growth after less taxes paid fell...
Sound like an economy that is improving?Not even close.
A big number that bears no resemblance to GDP numbers 12 months ago due to all the fudges brought in. Sadly these fudges that have given false good numbers could end up causing more problems. Oh the irony!!!
It's come full circle to a Charles Dickens novel again....it's the best of times for .001%, worst of times for everyone else. Fuck off and die Tiny Timmy.
There are going to be some good discounts in the next few weeks.....75% off or more....and probably some going out of business sales too..
Great deals coming after XMas. Just hold out.
Stuff those channels bitchez and let them eat cake!
Still waiting for some free flat bed trucks from GM. Wait, it's coming....
I'm on the inside track at a GM/Chevy dealer out in the sticks by my survival retreat. The guy is a 'lodge brother' he has bought in on TEOTWAWKI. He's made plans to give everything on his lot to the lodge brothers when TSHTF. He even thinks he can get on last delivery and has a list of colors/options from all us lodge brothers.
I'm almost looking forward to it.
TEOTWAWKI will derive from no oil and so no gasoline to drive those cars you're excited about.
I'm leaning towards financial collapse myself. Besides, I've made arrangements for the necessary petroleum products.
Mr. Bernanke/Yellen: I understand that lately you have been concerned about holding too much of the US Treasury market through your QE operations. May I suggest a new asset class you can purchase?
Sincerely,
General Motors
Don't worry, Kyle Bass is on his way...
Dont't put ideas in their heads. 3.6% GDP+; hmm. hm. empty housing development; real-estate companies out of business; half a parking lot to play frisbee in at Wal Mart on Saturday; no traffic; got the road to myself; not that I want to use it. Yep, sure lools like a boom to me, alright.
It is a bit of a mind-bender sometimes. Watched a brand new Ferrari drive past a shuttered office park not far from my office yesterday. I've seen quite a few Ferraris, Maseratis, etc. the last year or so.
It's all happening again.
You're right; it's getting surreal.
I'm not trying to sound like a know it all, but, um, I've been looking into this QE thinga jig, and as long as they kickin' it, we all good.
There is, how can I say this: I know! all caps=NOTHING that will ever stop this market. Buy. now. buy the dip, buy the high. Buy everything except useless metals.
We are in the sixth inning of the greatest rescue ever from the most brilliant patriots in history: Our Federal Reserve. I love everything life has become. Join in the Greatest American Re-Revolution!
/
The "/" means sarc....damn, even overboard sarc is getting trashed. I'm going back to healthcare.org blog site where people get it.
/
I think you've successfully avoided sounding like a know it all. /
This story screams "Channel Stuffing for Thanksgiving !!"
> I love everything life has become.
A worthy read for anyone who needs a primer on how we got here:
The Dark-Side Psychology Behind Holiday Madness
And we can buy it all with bitcoin.
What?.......
Nevermind.
Wal-Mart's best selling item on Black ThuFriday? The $0.29 bath towel. If you ain't selling consummables to the proles or jewelery to the 1%, you ain't in the right retail business. The after X-mas sales will be spectacular (not that any of us will need the marked down Chinese crap).
ETA: Here's a source for the Wal-Mart thing. $1.74/6 towels = $0.29 per towel.
http://news.msn.com/offbeat/the-best-selling-item-at-walmart-on-black-friday-was-towels
boy, I bet that's a really high quality towel; too.
A Handi Wipe will last longer
Well I guess the drunk analyst at Deutsche was right after all. Good for him. I mean, he'll probably still he laid off when the market takes a shitter, but he'll always have this.
The algos dont give a fcuk about "between the lines" which is a shame...personally I can't wait till all human traders are replaced with fcuking algos, maybe that'll wake up michelle crusoe cabrera and her shitty "liquidity provider" thesis
You fucking mis-fucking spelled fucking fuck two fucking times fucker!
Obscenity is the crutch of inarticulate fuckers.
This is fight club pumpkin! If you are going to write the work fuck, write the word fuck.
The future must be in warehousing.
Meanwhile, everyone I know is cutting back their individual purchases, downsizing homes and reducing their fixed costs.
Perhaps all this inventory will appease the masses when the rioiting starts.
i really pray they fucking taper, but as we all know, they cant.
the funny thing is the msm thinks if they taper its good news because that means the economy is doing well, but the reality is the economy is fucking awful and the fed will find out real fast if they do taper just how much there liquidity was actually the reason for higher stock prices all along, which according to them, there is no bubble.
taper fuckers, i fucking dare u, i will get a great joy if u do.
Tapering might be the iceberg that the SS Federal Reserve didn't notice. If it starts going down by the bows; don't hesitate.
Thanks for the GDP breakdown Tyler. Nice work as always.
The dollar spiked up and took the usd/jpy with it only 20+ pips. Should have been much more. Now the dollar has fallen back and so has usd/jpy. If real taper fears start to materialize and the dollar really takes off, don't expect usd/jpy to follow.
No Taper. They can't fuck up Christmas.
Long AuD/JPY with a 90.8 stop.
Sounds like a rational trade. Good Luck.
For what it's worth, (nothing), I think the AUD is at a bottom in a periodic wave of sentiment thing; herd mentality, you know; fundamentally it's a strong currency.
I think you're right on with that call. Same thing with Cable reversed. 75% of U.K. GDP is service based. (financial services)
The manufacturing and construction PMIs were ok this week, but the services PMI missed badly.
Agreed. GBP is about done; time to put a fork in it.
That, and it has been pummled against the KIWI as well. No respect I tell yah.
A reasonable trade. Seems the bernanke wants us all to become day-traders again, microsecond traders even...
Bernanke has fucked me right out of trading equites. I just stick to FX...a lot of the same themes...but at least I am not directly supporting equities. That is my only form of revolt.
Save in physical assets, no matter what, because when fraud is the status quo (as it is now), possession is the law (especially when the supply lines break in earnest).
As John Major said: the world of tomorrow belongs to the new giants of the new financial age : USa and UK.
We be the men!
Amen!
So... a revitalised UK industrial environment, where today its production is LOWER than in 2007 BUT which shows a 2.6% Q growth and a 3.6% Q growth in US GDP means blue skies are here again forever more. 2014, 2014 not like 1914, 1914!
True, true if debt is asset and banks never have to pay back their debts thanks to carry trades and derivative gravy fed on ZIRP. And let those banks scam us even more in every asset market in the world.
Meanwhile step on that gas of QE stimulated printing to blast off the "real" virtual economy.
Or is it the real "virtual" economy?
Or worse, the "virtual" virtual economy, while we freeze in the real one!
New GDP algo paying off...Don't like the number, change it.. So we can taper now??? Right? Tap Tap Tap is this thing on? McFly anyone...can you hear me out there..
Do you need to have actual inventory for GDP anymore?
Make intangible inventory count. If you just think of selling a new product, all that product to be eventually produced will count in GDP. If we count every product thought of, imagine the growth potential.
Even government spending counts towards GDP. I guess if I use my credit card to go nuts and buy everything I see, it's good for the economy now. But if I decide to never pay the money back, somebody's got to eat the loss. Not going to be very good when somebody has to eat the multi trillion dollar credit line of the USA.
I'm a little embarrassed to say it; but I don't actually understand the concept of building inventory in the face of declining consumer buying capacity. I must be missing something really obvious here to the business school graduates; but I can't figure out what it is. I tried to read an economics textbook once, but decided it was delusional.
Here, let me help. Over 40% of the eCONomy/GDP is now in "finance", you tell me...
what is the real value of all that paper-pushing?
Fuck em, roll the mother fucking guillotines and let's clean house.
Agreed. Roll the guillotines up I-95 into Mordor. Let's see the mouth of Sauron (Jay Carney) treat with that !
I think you have to have an MBA to understand it. In the same way that you have to have an advanced Liberal Arts degree to understand how ObamaCare could possibly do what it's purportedly intended to do.
As a general rule, goods expected to be consumed this quarter and next quarter have already been manufactured in the previous two quarters. When an inventory glut appears, someone forecasted incorrectly. Inventories should be sky high at the end of Q4, unless spending increases. And we all know that aint happening this year.
Watch those consumer spending numbers once 0zer0care Sticker Shock turns into 0zer0care Wallet Drain after Jan 1.
3.6 Cheers for Biflation!
The more we print, the less we can afford!
Do you expect them to announce bad news before Christmas? This is no different than when Obama was running for re-election.
On the other hand, if velocity is really picking up, and money is being mobilized, Peter Schiff is about to be proven correct again.
A big number that bears no resemblance to GDP numbers 12 months ago due to all the fudges brought in. Sadly these fudges that have given false good numbers could end up causing more problems. Oh the irony!!!
With all this growth....3.6% and the unemployment dropping.....In Econ 101 means inflation is just around the corner...right...so should be good for PM's.....NOT...Gold dropped back down...Silver too...oh well back to college for me...I need to learn the new Econ they are teaching...my old stuff is not working anymore
Let us know when you get it figured out; personally, I feel I'm dancing in a dark room and tripping over the furniture. Clueless, would be an improvement from where I am.
Smells like a buildup of malinvestment to me
Stuffing with Turkey talk..../mmmm good.
What are the "Private Inventories" ? Prepping inventories ?
First they isolate themselves. Then they believe their fantasies are true. Then they commit suicide.
Optimist.
You beat me to it! Gave you a one up for that.
Truthiness while we effort.
Its all good.
What could be better ?
At least we made it this far.
Dig that hole. Fill it back up. Dig that hole Fill it back up.
Don't forget the gov't re-jiggered the way they compute GDP-more bullshit propaganda.
We are eating the multi trillion dollar credit line of the US every day. Starve the beast. If you are W-2 employee go into HR and claim 12 dependants on your withiholding form. No more money going to the Feds every week. If 20% of the W-2 workforce did this it would get their attention. It is the only thing they understand. The whole world knows the US "full faith and confidence" is about the same as "the check is in the mail". China is buying everything that is not tied down and making alternate currency deals with everyone who will do it. I don't think they can shut down the power of the petrodollar but they damn sure can flood the world with useless US Treasuries. I think "may you live in interesting times" is upon us. On a side note, I took the 80 turnpike across Ohio 16.50 Indiana 12.50 and parts of PA,, dont remember. My God, wait til they tax the air we breathe. Oh, wait a minute, talk to Al Gore. Good day all.
At least those are large states. It's that much through tiny Delaware and Jersey.
The problem with your withholding plan is that there aren't 20% who care or get it. Plus if actual tax dollars slowed, the Fed would just lend .gov more. And there would be no consequence.
Dump all the inventory in the ocean and start accumulating again next year. What is the problem? /sarcasm.
Oh, so that's the plan. I knew there was something I wasn't getting.
I think they're coming to an end of loaning money to the consumers. Unless more people are doing chapter 7, you can only have so many payments a month until there is nothing left.
Really? Is that the way it works. How interesting. What happens then, they send you a new City Bank Card in the mail and you get to do it over?
Not when you just got dumped off of your health plan, Christmas and the New Year for many will just plain suck. Not knowing is what kills the golden goose...
heh @ SAT
There are those who will no doubt jump on the *new* cards and not care about the 3% fee for a balance transfer and zero % APR for 12 months. Now don't get me wrong, you can surf the debt for 0% interest but eventually one is going to hit the cap on their limit.
charge card offers in the mail now at least twice a week. Last time it was like this? 2008. Priceless. Hold on this is going to be an interesting ride.
Last time someone told me that it was my acrobatics flight instructor in an AT-6; I held on so tight I left fingerprints in the steel fuselage tubing. I hope this isn't going to resemble that. It turned out I wasn't cut out for acrobatics; I just can't used to the idea that the Ocean is over your head at the top of the windshield and the sky is down below your feet someplace; it makes my inner monkey sick.
3.6%? What 2.6% is "intangibles"?
wwwwweeeeeeeeeeeee!!!!!
Just like China does it.
Now who wants a $90 60 inch flat screen TV - we have warehouses full of them!!!!!
wwwwweeeeeeeeeeeee!!!!!
Almost in time for Thanksgiving - a GDP stuffed turkey!!
Is truth stranger than fiction, or what??
“But I don’t want to go among mad people," Alice remarked.
"Oh, you can’t help that," said the Cat: "we’re all mad here. I’m mad. You’re mad."
"How do you know I’m mad?" said Alice.
"You must be," said the Cat, or you wouldn’t have come here.”
Lewis Carroll, Alice in Wonderland
When consumption, one of two primary components of any market, is dropping look to a following of lower MFG. Don't be suprised if it is bouncy but, then goes considerably lower. WE're talking S&P and Dow. Look for high fake outs and have fun.