The Mystery Of Surging Q3 GDP Explained And Why Americans Are Suddenly $80 Billion "Poorer"

Tyler Durden's picture

The final major datapoint of the day was the Consumer Income and Spending data from the US Dept of Commerce's Bureau of Economic Analysis, the same outfit that yesterday shocked everyone with just how much better US GDP was. Well, today, we learned just where the offset came from. Because while on the surface, both income (+0.2%) and spending (+0.2%) missed expectations of a 0.4% and 0.3%, respectively...

... it was the revised data that the US department of data fudging once again showed why it has long since surpassed China.

Behold what is perhaps the most important data series in all of US eco: Disposable Personal Income. We say behold, because there are some rather massive variations between what the BEA reported a month ago, and what it reported today, as relates to all the data issued since March. To wit:

Essentially, the just reported Disposable Persona; Income print of $13.109 trillion as of the end of October, is where according to the old, unrevised data US houshold income was some time in August. Whatever happened to two months of income?

Which brings us to the other all important number: the personal savings rate. At just reported at 5.0%...

... something strucks us: this number was reported at 5.6% last month.

And sure enough, since Disposable Personal Income flows into personal savings, net of outlays, it was clear that American savings would be dramatically impacted as a result of the massive data revision.

Sure enough, this is how the US personal savings rate looked like based on the old and just revised data.

 

And, the punchline: US savings in absolute terms, an $80 billion decline in savings from the old September print and the latest, post-revision, number of just over $650 billion.

So there you have it: in order to "suggest" that the US economy had grown by a far greater than expected run-rate, the BEA was forced to revise away personal income, and "assume" these had instead been invested in the US economy, in the form of a surge of durable goods purchases. Sure enough, while both incomes and savings tumbled, spending magically surged:

So if that "statistical" amount of money you thought you had saved in the BEA's savings.xls spreadsheet just dropped by 10%, fear not dear Americans: it was all used for a good cause: to fabricate a much stronger than expected Q3 GDP number.

Source: BEA

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JailBank's picture

Why would anyone need to save? The Gubment is going to take care of me right?

Headbanger's picture

WTF !!!!!!!  ?????????

And I'm sure CNN will jump right on this outright lie to the American public just as soon as they finish stirring up racial tensions..

DaddyO's picture

Don't hold your breath, there is so much more to gain in the debasement of civil rights.

Two nights of watching the debacle in Ferguson and the sheeple are crying for more 'protection' from the very entity that created the crisis.

The charts above outline the theft that is taking place while we all watch the FSA exact revenge and blow up their neighborhoods and the businesses in them.

DaddyO

economics9698's picture

Who the fuck cares at this point?  Bagdad Bob lives another day, but those days are fast coming to a close.

walküre's picture

Where did the money go? Gas prices keep falling so it's not there. Rents are high but stable. Did Americans advance their holiday shopping this far out? Did retail sales take the bulk of this money?

NotApplicable's picture

Debt service, groceries, and infotainment. Oh, and drugs of choice, of course.

photonsoflight's picture

I can think of at least ten old people taking many prescriptions looking down their nose at some young punk smoking a dube. Hypocrisy rules.

NoDebt's picture

As many of you know, I'm an economist by training (although I'm feeling much better now).  From that massive investment in my knowlege of all things economic, I have the following comment after reading this article:

Wait, WHAT!?!?!

Kudos to the Tylers on piecing this together.  I know it's not the easiest stuff to read and understand, but I really couldn't make it any more understandable than they did (OK, to be honest, I could, but the Tyliers deserve their moment here).  Suffice it to say, it's exactly as dirty and twisted as it sounds.

Those who disregard all published numbers and dismiss them with "it's all bullshit".... well, you may have a point.  This is garbage statistics.  Utterly irrelevant and unreliable for anything but printing a goal-seeked headline number.

 

cahadjis's picture

Thanks, it's good to have confirmation.

IANAE's picture

...so how does an off-the-beaten-MSM-path blog get this kind of insightful analysis on the broader financial media radar so that more are aware?

 

I recall seeing ZH-reported info cited on CNBC at one point (by Santelli?) who gave ZH props ...

NoDebt's picture

There is a difference between doing ACTUAL journalism and merely reguritating government-approved AP stories.

This article would be an example of ACTUAL journalism.  I will bet you Santelli read this article.  Liesman was too afraid to open the link.

KnuckleDragger-X's picture

Just do a couple of lines of fairy dust and mix up a big unicorn pee cocktail and things will look just fine......

lasvegaspersona's picture

No Debt

An economist...no wonder you seem to make sense sometimes...in a strange and twisted way of course.....but sense...

JR's picture

Eliminate the Middleman | Lew Rockwell

Time magazine is out with a defense of rioting, looting, and burning in Ferguson. It’s all justified thanks, of course, to “white privilege.” To Time, long a purveyor of regime myths, it’s fine if individuals imitate the State, and redistribute the wealth themselves, as well as make mini-war.

11:13 am on November 26, 2014

http://www.lewrockwell.com/lrc-blog/eliminate-the-middleman/

The Merovingian's picture

Hmmm ... just like 'jobs saved or created' this data set is now known as 'income saved and savings spent'.  What a farce.  

The Merovingian's picture

Or, as Pelosi put ... "we had to spend the money in order to save it"!

rsnoble's picture

No worries......if you do decide to save and things turn really bad the gov't will take care of your savings as well.

junction's picture

These tuned-up GDP numbers act like a Hollywood set false front facade, the numbers are for show.  The best general indicator for what is going on in the world economy is the number of superyachts in circulation.  Until 15 or so years ago, 200 foot superyachts built from scratch were a rarity.  No more.  News reports about some of these superyachts show the dimwit press salivating about the size and features of these big boats, not about the obscene waste of resources these big boats represent.  During hot summers, news media pass on the message to tell a city's residents (peasants) to cut their power usage to prevent overloading the power grid, to avoid brownouts and blackouts.  The superrich are exempt from worrying about brownouts, they can hop on their superyacht and take a cruise.   

lasvegaspersona's picture

Yachts...great way to stoke the envy machine...they did that back in the 80s and taxed them...all it did was put a lot of US builders out of business.

Haus-Targaryen's picture

So the US is fudging the books like the USSR did right before its collapse -- 

I remember reading an article about ways the soviets would fudge the numbers, they would start construction on a building that was only 15% funded -- and then when the money ran out, mark the structure as completed, and create 85% of the structure's price out of thin air, thus inflating GDP without anything to support it.  

Less than a decade later, the whole thing imploded, and there was enough money to bring members of the military home, but not the equipment.  I think we are in for the same shit show.  

My question is this -- do you think Americans will stay in the USSA chanting "USA USA USA" the entire time, or do you think people will start leaving like they did en masse from the USSR post collapse?  

Antifaschistische's picture

Yes, they will leave...

....then the USSA will terminate SS bene's for citizens who do not spend at least 6 months a year at their primary US residence. 

Haus-Targaryen's picture

Where will they go?  

Seems like a great way for Northern European countries to fill their demographic holes.  

 

mtl4's picture

Ditto, you certainly won't be alone on that one.......

lasvegaspersona's picture

and a Guatemalan will come to fill their spot.

lasvegaspersona's picture

Benefits will be paid long after the dollars value goes to zero...They will always make good on their promises...at least nominally. "Here is your check sir, $1500, I'm sorry that is less than the cab fare to get here..."

JR's picture

Many of the people who left the USSR post collapse were Jews and they were taking their money with them. Of course, US taxpayers paid for their resettlements both in Israel and the US.

Will Americans leave post the collapse?  Where would they go en masse? In truth, they need to stay and protect their property and freedoms by overturning this social-welfare banker-tyranny system.

Much of the taxpayer money flowing into the bankers’ network is flowing directly into their Big Box Stores and large chain stores carried there by EBT cards.

For instance, Costco’s Wholesale Manager Jim Sinegal offers EBT card members tremendous savings (Costco gained its extremely lucrative position in the market based on a concept of selling wholesale only to retailers for resale -- requiring membership -- but the concept went out the window almost immediately as wholesale right memberships were issued to everyone; thus insiders with banker connections were able to drive local businesses out of the market using fraud, i.e., pretending to be wholesale when they are not) :

From Costco's website: "We welcome cash, checks, debit/ATM cards, Costco
Cash Cards, Costco Credit Cards, EBT Cards and
American Express Cards."

http://content.costco.com/Images/Content/Misc/PDF/10EX1222_A_CostcoSvcDir.pdf

Note: From Wikipedia 1990s Post-Soveit aliyah: "Between 1989 and 2006, about 1.6 million Soviet Jews or family, as defined by the Law of Return, immigrated from former Soviet Union. About 979,000 or 61 percent migrated to Israel. Another 325,000 migrated to the United States, and 219,000 migrated to Germany." Gorbachev opened the borders of the USSR beginning in the 1990s to allow Jews to leave the country for Israel....

Haus-Targaryen's picture

I think people are inclined now to say they will stay because they are comfy where they are at.  

As the Welfare state gets larger, and the Fed ever more powerful, I keep wondering when, those of us on the Libertarian/Right wing of things will say "enough" and start searching for a less-repressive less KGB state. 

walküre's picture

Europe has much to offer in that regard. There are many reasons why Europe with all its flaws is still a much better place to live and raise family than the US. Let's face it, unless you have tons of money to afford a gated community lifestyle, the US simply sucks. Government is intrusive, spying on its citizens and if you're caught in the middle of a dispute you will get shot as there are guns everywhere. Legal or otherwise. Then there's the whole medical and judicial aspect. You never ever want to be involved in a legal dispute or have someone sue you in the US.

Canada looks nice and has better quality of life but its too close to the US. When SHTF in the US, there won't be a safe place in Toronto or Montreal.

Europe's population is pretty homogenous all around. Even the muslims make an effort. I know that's a big bone of contention for French, Dutch, Brits and Germans but it will settle itself.

Americans are notoriously paranoid and ignorant. The state is a powder keg, a kettle of boiling water. Ferguson is just a small glimpse of how deeply divided the country is and how enraged many many citizens are. TPTB can try and promote nationalism with propaganda 24/7 but when people have no hope and live in a constant state of government warfare and psy-ops it is better to quietly leave....

Give it 5 to 10 years tops before the US blows up to Smitherines.

Russia is NOT my enemy.

Haus-Targaryen's picture

See I agree with you there.  I see in the next 5-10 years the USSA blowing up, and the wealthier/more educated people will GTFO back to Europe.  

I think it would be prudent of various "European" countries to put laws in place making it easier for the decendants of former ex-patriots to resettle back on the continent.  Especially the young or wealthy or educated.  The American middle class' work ethic, while not the envy of the world like it once was -- could really help fill in the demographic holes in "Europe."  

Even if just say 10% of the American population comes back -- thats 30 million people. I know that seems like a massive number, but if Fergusons become a normal thing, the welfare state goes tits up, the 2nd Amendment is neutered beyond recognition -- then this could become a real possability.  

Stealing trained farmers from California should be like shooting fish in a barrel right now.  It amazes me none of the European governments are attempting to lure people to come.  

"Hey sell your shithole piece of the desert, and buy farmland here in Germany.  Sure, you cannot have weapons, and it won't be as big -- but the quality of life will be similar if not better, no need for irrigation and we have the best booze in the world for those cold winter nights.  

tarabel's picture

 

 

Wow, you guys have such short attention spans it's not even funny. Remember how London was shut down for a week by rioters and looters going berserk over the police shooting of some guy?

That's the capital of the country, not some ghetto suburb of St. Shithole, and they ruled the city for days on end. Over here in violent America, they plundered a liquor store and trashed a McDonalds one night and then went home to BBQ.

I particularly think of you when I flash back to that wimpy metrosexual London guy meekly handing over all his clothes.

Remember that?

Fuck no, you don't remember that.

But I do.  

http://theweek.com/article/index/218195/london-riots-6-shocking-stories

http://www.prisonplanet.com/forced-to-strip-naked-in-the-street-shocking-scenes-as-rioters-steal-clothes-and-rifle-through-bags-as-people-make-their-way-home.html

That's you right there, mighty internet Valkyrie.

SoDamnMad's picture

JR

I remember in the late 80"s watching  Los Angeles TV on Sunday mornings when the stations gave time to the ethnics and there were these pleas to donate just $800 to bring  Jew from Russia to the Promised Land.  "Just $800. Won't you please go to the phone now and pledge. "  No job, no skills.  Steal land and get the USSA to fund the country.

JR's picture

No plea, of course, of any aid for Christians, many who were denied exit from Russia.

Even if the "six million" Jewish Holocaust figure is true - which Revisionists contend it is not with even the NY Times admitting for a time the number more likely is “two million” - the Marxist anti-Christian Holocaust was almost 16 times worse!

Here is an excerpt from of an article in the November 23, 1998 issue of The Christian News titled, "The Russian/Marxist Holocaust," written by Dr. Albert Jabs, Chair of the Chair Department of Multidisciplinary Studies, at Shaw University, Raleigh, NC. Here is what Dr. Jabs wrote:

The war to end all wars - World War I - did not end the war against people. After the Great War stopped and people danced and cried with joy, a greater war, against civilians, began in the new Soviet Union.

According to recent research by R. J. Rummel (University of Hawaii) Lenin unleashed a chilling carnage, which continued through Stalin and others right up to 1987 that resulted in the death of approximately 95.2 million (Lethal Politics). In other words, according to Rummel, ***more lives were lost in Marxist countries, like the Soviet Union, than had been lost in both World Wars - and this genocide or democide was done by government against their own people.***

Rummel has done massive research in genocide and mass murder among nations, and while in teaching World War I and World War II history, I have noticed that some historians are quick to raise the red flag when discussing the Red Scare period after World War I and the McCarthy era after World War II. The paradox is that many historians simply omit Marxist countries, in regard to murders of their own citizens. This culpable omission may be that history is written by left wing historians who may themselves have flirted with the idea that utopian Marxism has something to contribute.

I have heard professors speak glibly about Marxism in my trip to the former Soviet Union, with democide on their own people and others...to such an extent that their lives were so much disposable chemicals.

Marxism, in the minds of many who suffered under its totalitarianism, saw it as being worse than Hitler's national socialism, which was bad enough. The Marxism of the early Civil War period (1917) through collectivization, the Ukraine starvation period, the Terror before World War II, and the Terror after World War II and the other historical periods are there for the reader to see.

In view of the devastations, it is difficult to understand how the U.S. and FDR, and England, and Churchill, could have been so duped by arch criminal, "Uncle Joe Stalin", as Roosevelt referred to him, and establish communist hegemony in the heart of Europe. At one time much of what has been stated would be considered to be right wing, but the facts of Rummel are unassailable. Russia at the present time needs to be fed by the US and other nations. For humanitarian reasons, people should be helped, but it would be valuable, even with Russia's nuclear missiles, to know something of its horrific history.

World War I ended yesterday, 80 years ago, but a greater war against civilians now began. I heard (my father) say that the Russian people were essentially like people everywhere. Yet, the intellectuals like John Reed thought heaven was around the corner; it was, but it really was hell on earth.

(end of Jabs article)

JustObserving's picture

Who can trust any US economic numbers anymore? They are just manufactured to suit the needs of the moment.  

US GDP would be cut in half if inflation was properly accounted for just the last two decades. And let's not forget the $500 billion added to US GDP due to Apple iTunes and other intangibles in July 2013.

http://www.zerohedge.com/news/2013-04-21/us-gdp-will-be-revised-higher-5...

Rainman's picture

If you like bullshit, here's some more ( just in time for Black Friday shopping )

" Consumer comfort best since 2007 "

                     http://www.bloomberg.com/news/2014-11-26/consumer-comfort-in-u-s-rises-to-highest-level-since-2007.html

sun tzu's picture

...and then came 2008....

suteibu's picture

Why would you trust anything coming from the government?

Really...that's a serious question.

Glass Seagull's picture

 

 

Consumer savings "robs" the corporations of revenue.

Enough savings will see corporations punish said savers with layoffs.

Capiche?

JRobby's picture

Stop feeding the beast, buy from local businesses, start a vegetable garden. Keep driving your old car or buy one from a private party.

Vuke's picture

+ another thousand.  Don't feed the Beast (that includes gov).

Last of the Middle Class's picture

Everything is fine. Move along, nothing to see here. Ignore the police officer in riot gear. And if you're white you owe people of color some skin, it won't hurt much, just smile and be thankful that was all they took.

Vuke's picture

I don't mind owing people of color, some skin.  It's the banksters and tax obligations that get me.

Racer's picture

All the 'savings' in banks is just pretend because if all the people wanted to get their money they wouldn't be able to, therefore it does NOT EXIST

JRobby's picture

I think savings will continue to decline.

Slowly the mainstream is beginning to realize that the system may not protect their deposits.

The9thDoctor's picture

I think savings will continue to decline.

The current economic structure has made savers into losers.

A "high yield" savings account that's advertised here on ZH offers .90% , meanwhile credit cards offer 5% cash back rewards.

Why save up cash for something, when credit is so easy that one can sign on the dotted line?

YHC-FTSE's picture

+1 @Racer

Your comment needs to be highlighted because that is precisely the real world situation we have in fractional reserve banking. The cash reserve ratio in commercial banking is between 3% - 10% in the US. UK, New Zealand, Australia and Sweden have no reserve requirements at all. (In the UK upto £85k is guaranteed by the govt). Basically that means over 90% of savers are fucked if they all want their savings. So those fudged  "Savings" figures are exactly what you say, pretend.

Banking rules and systems are as covoluted and esoteric as quantum mechanics. Imaginary concepts, theoretical values and probability of existence all figure in its machinations. That's just retail. Investment banking products are even more insane, just ask any prop desk trader. Add to that the inbuilt moral hazard of tbtf banks and the wholesale theft of the store of value in money through political cronyism and frauds involving astronomical sums in the markets, what we have today is the utterly corrupted insanity of trust in a broken, manipulated system. Setting up Basel II to ensure capital management requirements to obviate risk has been a running joke for the best part of a decade and all it has done is make sure everyone on the globe gets fucked when counterparties collapse instead of the few squids who caused all the problems.

My savings? They don't exist nor can they ever be put in a ledger because like most seasoned ZHers, my savings involved a deep lake and a leaky boat.

SAT 800's picture

Citizen, you are not supposed to be thinking thoughts of this type. Whether or not they are objectively "true"; does not matter, as truth is determined by the ministry of truth.  It's a little hard to get used to, but we live in a Fascist Dictatorship.

cowdiddly's picture

"You can change the way things look, but you can't change the way things are" -- Jim Grant

WTFUD's picture

Wazza matta you?, hey
Gotta no respect?, hey
Whatya thinking of? , hey
Why you looka so sad?, hey
Things are not so bad
it's a nice a place
Ah shutupa ya face.