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US Economy Grew At 2.0% In Final Q3 Estimate; Massive Inventory Overhang A Key Risk For Future Growth

Tyler Durden's picture




 

In today's anticlimatic economic print of the day, moments ago the BEA reported that Q3 GDP declined from 2.1% as per the first revision reported a month ago to 1.97%, fractionally higher than the 1.9% expected, as a result of a modest decline in Personal Consumption Expenditures as well as Private Inventories and Net Trade, offset by a fractional pick up in Fixed Investment, a category which will see far more downside in the quarters to come unless oil prices rebound, and the smallest possible increase in government spending.

 

As the detailed breakdown chart below shows, there were no material changes among the key GDP categories.

 

PCE printed at 3.0% in the final revision, same as a month ago, and above the 2.9% expected. Looking at the personal consumption components shows where the changes were: while Financial Services and Insurance saw an annualized drop of $9.4 billion to $729.5 billion, this was offset by another increase in recreation services ($3.1BN), Furnishings and Durable Household Equipment ($2.9BN), and Gasoline and energy goods which rose $1.5 billion.

For those curious what the long-term trend of sequential, not current quarter annualized, GDP growth looks like, at 2.1% it is well below the 2.9% annual growth rate posted just one year ago.

 

That said, the biggest risk remains in the one category we have flagged since the summer: Private Inventories, which while revised modestly lower from a change of $100BN in Q3 to $95.3BN, still suggest there is a massive inventory overhang heading into Q4 and 2016, one which will likely impact GDP by at least 1.5%-2% if not more once this long overdue inventory liquidation takes place.

 

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Tue, 12/22/2015 - 10:00 | 6952397 firstdivision
firstdivision's picture

Glad GDP shows the true picture of economic growth, else I'd figure there were a shit ton of people not in the labor force not counted as unemployed.

Tue, 12/22/2015 - 10:17 | 6952450 NoDebt
NoDebt's picture

We cling to the "2% growth" story with the same fervor that China clings to their "7% growth" story.  The Chinese are probably even more full of shit than we are, but we're catching up to them quick.

 

Tue, 12/22/2015 - 10:24 | 6952476 BarkingCat
BarkingCat's picture

We are old timers at this bullshit while China is still an amateur.....so our bullshit is much more sophisticated.

Tue, 12/22/2015 - 10:37 | 6952529 NoDebt
NoDebt's picture

Very true, but the offset to that is they have a cultural advantage over us.  They're oriental and never want to lose social status.  You're talking about an entire culture built upon the premise that nobody can ever admit a mistake was made or a goal was not met.  Their lies won't be as sophisticated but they will be more desperate.

Tue, 12/22/2015 - 11:26 | 6952725 Dollarmedes
Dollarmedes's picture

China was corrupt 1,000 years before we were even a country. Seriously, by now it's actually part of their culture if not their DNA: one of their first inventions was bureaucracy. If you disturbed the "social order" you were killed by the Emperor.

Do that for 1,000 years and pretty soon all the trouble-making genes will be selected out of your society.

Tue, 12/22/2015 - 10:18 | 6952452 y3maxx
y3maxx's picture

...Stocks will plummet after...

 

1/

CEO's have sold off the last of their stock options

Tue, 12/22/2015 - 10:03 | 6952399 Cognitive Dissonance
Cognitive Dissonance's picture

At least the US doesn't 'suspend" data reports until they can implement major revisions. They do it on the fly.

Mama always told me...."Lie well or don't lie at all." The key to an effective lie is giving the 'lied to' a reason to swallow the garbage. A good lie that is plausible is precisely that.

Tue, 12/22/2015 - 10:01 | 6952401 -.-
-.-'s picture

This + Gartman = Beyond bullish

Tue, 12/22/2015 - 10:04 | 6952408 Kina
Kina's picture

True or False and who knows?

Tue, 12/22/2015 - 10:08 | 6952420 silverer
silverer's picture

Curious to see what the final Christmas sales tally turns out to be.  I don't think people will be in the mood to shop much after the holidays are over.  I guess they can always use the excess inventory for landfill projects.

Tue, 12/22/2015 - 10:44 | 6952552 plane jain
plane jain's picture

The inventory overhang idea is interesting.

Middle aged middle class mom here. The mom's message board I spend most time on runs a shopping thread year round, but the hot time is Thanksgiving - Christmas.

Ladies are unanimous that this shopping season was the lamest/most disappointing for hot deals in several years. These are women with school aged children to shop for living all over the country.

So do retailers want to sit on inventory? There have been a couple of last minute hurrahs for clothing (coats, boots, etc.), but that is about it.

Tue, 12/22/2015 - 11:01 | 6952602 Hitlery_4_Dictator
Hitlery_4_Dictator's picture

I hate shoppers, I wish people here would get a clue and stop shopping, stupid slaves

Tue, 12/22/2015 - 12:12 | 6952904 Consuelo
Consuelo's picture

 

 

I'm gonna give that a nice, round +400...   I wholeheartedly agree.    The reversal of materialism and over-consumption would do this F'd up society a lot of good.

Tue, 12/22/2015 - 10:10 | 6952425 tarsubil
tarsubil's picture

When reality sets in, it is going to be like hitting a cement wall at 100 mph.

Tue, 12/22/2015 - 10:28 | 6952495 Wannabe_Oracle
Wannabe_Oracle's picture

I'm just trying to fully understand this puzzle of words:

 

 The U.S. economy grew less than initially estimated in the third quarter, but still beat expectations, official revised data showed on Tuesday.”

Tue, 12/22/2015 - 10:53 | 6952579 moonmac
moonmac's picture

Inventory stacked to the rafters is good when everything is needed ASAP. The problem occurs when 95% of the inventory isn’t currently needed. More and more jobs require special parts(engineers trying to be different) but it’s hard to make more product when your factory is already packed with shit.

Tue, 12/22/2015 - 10:59 | 6952594 general ripper
general ripper's picture

I think they are lying. A 2.0 (which by the way was my GPA in college) is a little too convenient. They just didn't want to show anything with a 1 handle.

Could hurt Santa rally.

Tue, 12/22/2015 - 11:16 | 6952663 kaboomnomic
kaboomnomic's picture

Quoting Quarter data, but ANNUALIZED the number (times 4, if you still don't get it.)

While int'l reporting standard? They quoted ONLY THAT QUARTER NUMBERS.

Still thinking you have higher standard than China govt reporting?

And that data? Haven't gone to SEASONALLY ADJUSTED process. What the excuse now? Because we bombed AGRABAH CITY??

Fucking clueless americans..

Tue, 12/22/2015 - 11:59 | 6952858 Rikky
Rikky's picture

After XMas winter clothing deals are going to be ridiculous heck the temperature is going to hit 73 in NYC Xmas eve.  I think there's been only 2 days where you had to wear a winter coat so far.  70-80* off should be the norm for winter gear which means the manufacturer will break even on their investment crooks.

Tue, 12/22/2015 - 13:32 | 6953214 ajkreider
ajkreider's picture

Flashing reces . . . . .

 

Nope.  Still not.

Tue, 12/22/2015 - 15:26 | 6953688 Mr. Guts
Mr. Guts's picture

Was at a restaurant/sports pub the other night, how's business?  The server replied "terrible, last year and from since I've worked here, great tips, lots of holiday traffic but not this year, I don't know what's going on."  Goldman was probably hoping for a blizzard, but I suppose a heat wave will do.

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