Final Q3 GDP Misses As Personal Consumption Drops Big

Tyler Durden's picture

And so the year ends not with a bang but with an economic whimper, as the final Q3 GDP is revised lower from 2.0% to 1.8% on expectations of an unchanged print. The reason: Personal Consumption contributed only 1.24% instead of the 1.63% in the second revision and 1.72% in the advance forecast. No bias there at all. But sure enough, here comes the inventory kicker, which subtracted just 1.35% instead of the 1.55% seen previously. What this means is that the inventory kick which was expected to come in Q4 2011 was pushed forward to prevent a 20% collapse in GDP today as keeping inventory change fixed would have resulted in a 1.6% Q3 final GDP. Net net - very weak report and one which portends weakness from Q3 is spilling over in Q4, where in addition to everything we will soon see the NAR existing home sale adjustment hit the economy with a double whammy of historical adjustments.

In other news, the BLS reports that US businesses have increasingly less temporary workers left to fire, as Initial Claims came at another 3 year low of 364K down from an upward revised 368K, and well "better" than expectations of 380K, which only means that employers are only borrowing termination time from the future as the economy is finally starting to decouple with reality. Just as amusing, the BLS has completed 2011 with a perfect track record of prior upward revisions in continuing claims, this time the previous number being raised from 3,603M to 3,625M with the current one largely irrelevant. Finally, the 99-week cliff once again creeps up as 136K people drop off extended claims and EUC benefits. Merry Christmas - the economy is improving and what not.

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Schmuck Raker's picture

The resumption of consumption was an assumption...

Temporalist's picture

Bernanke's got the fix in 15 minutes...after he tells people to spend more and tries to drive them from savings...which will take longer...but no more than 15 minutes after that.

economics1996's picture

The “growth” in the USA last quarter can be summed up as follows. The GDP “increased” 2.0% and the Gross Domestic Income, what we are actually earning, grew at a 0.3% pace. You do the math.

I get so fucking tired of having to dig through the Ministry of Truth's numbers and find what is real these days.  Fucking bull shit.

economics1996's picture

If anyone is interested here is a study of how government growth retards real economic growth (the part of the economy where people produce real things) 0.5% to 1% per 10% of government growth.

The printing has all been our parasite politicians wanting a free ride.  We are approaching our King Louis XVI period in our history.

The Limerick King's picture



With numbers that fake our consumption

So that liars can claim growth resumption

When truth finally hits

And makes cognitive fits

Enslavment's the only assumption


TheSilverJournal's picture

As we all know, GDP is not a good measure. Here are some of the problems with GDP.

The Problem with GDP

eureka's picture

 - but, but, but Bloomberg says there were 4,000 less initial jobless claims and that the slow down in firings will form the base for increased consumption, which drives the US economy....

Bloomberg is soooo educational and poooositive.... - and surely this good news and positive attotude will drive stocks up today...

Hopium and lies for dummies - stuff of Empire, Bitchez!

HelluvaEngineer's picture

Why can't the algos figure out that this is bullish?  Time to buy more CMG!

search's picture

Leading some to a resumption of stock dumption

espirit's picture

If one should put a negative (-) sign in front of those numbers...

it's bullish, right?

Everybodys All American's picture

and that's what 5 trillion more in debt gets these days?

Temporalist's picture

It wasn't enough.  Just ask Paul "I Wish I Were In A Twilight Zone Episode" Krugman.

John Law Lives's picture

Imagine where GDP would be if a balanced budget had been required during the last 5 years.

fuu's picture

A smoking hole in the ground?

John Law Lives's picture

A black whole... which is where the 99ers reside after their unemployment benefits expire.

Corporate EPS growth is under strain in many sectors.  It is not believable that companies are about to begin a massive hiring spree.  

economics1996's picture

A balanced budget accomplishes nothing.  Federal spending has to be restricted to no more than 18% of the GDP, preferably 11%, killing the social programs completely.

economics1996's picture

Clinton 18.2%, Bush II 20.7%, Obama 25.3%.

John Law Lives's picture


My point was that GDP would have been substantially lower without the trillions in deficit spending over the past 5 years.

ThrivingAdmistCollapse's picture

Non-existent since social programs would be cut to the bone and nobody would have any money to spend on anything.  Moreover, if we had to live by a balanced budget for 5 years, we would've had a deflationary economic collapse by now.

Dick Darlington's picture

No no no, can't u see, it's all good. Actually, to quote, it's "great news for the eCONomy".

Dec. 22 (Bloomberg) -- Drop to 364k last week (est 380k)
“is great news” for the economy, could point to big payroll
gains, writes Ian Shepherdson, economist at High Frequency
Economics, in note.
• "Robust sales growth’’ is bolstering business confidence, limiting job cuts: Shepherdson
• If sustained, data point to private payroll gains of about 200k; could be as much as 250k if growth picks up and job cuts slow by end of 1Q: Shepherdson

And there u have it. It doesn't matter what the fudged numbers are, it's always "great news" and very bullish.

rwe2late's picture

I'll see your "great news", and raise a "surprisingly healthier" ...

according to AP:

“The job market is healthier. Americans are spending lustily on holiday gifts. A long-awaited turnaround for the depressed housing industry may be under way. Gas is cheaper. Factories are busier. Stocks are higher.

the economy has grown faster each quarter this year [my italics], and the last three months should be the best.

Most analysts now rule out another recession. They think the economy will grow at an annual rate of more than 3 percent from October through December.”

Esso's picture

Crappin' out, bitchez!

Irish66's picture

People are returning their black friday purchases due to no money..can't wait for those numbers

jay28elle's picture

Yep, have a friend who manages a Target in Dayton, Ohio...  said the returns on bigger ticket items from Black Friday are outpacing their worst expectations.  A bud of mine bought a 50" plasma from HH Gregg, took it back a week later - feeling guilty about spending when he should be saving.


Non Passaran's picture

Yep, numbers were on few days ago, I think this year's returns were estimated to be 21% higher or something (2011 vs. 2010)

roadhazard's picture

I heard $7 Bil. so far a week or so ago.

Jlmadyson's picture

So for the year GDP has run at 1.1%. I don't think anyone predicted that last year. Right at the tipping point and really Q1 and Q2 should be lower. Will they ever change that? Doubt it. Pathetic.

Anyhow, how can anyone say the US economy is being resilient with these kind of numbers? Ain't much better than all of Euroland.

economics1996's picture

The GDP is propaganda.  The only "growth" is borrowing and spending by the feds.

High Plains Drifter's picture

ok already. we told you we were sorry about double counting some of those house sales..........

mayhem_korner's picture

here comes the inventory kicker, which subtracted just 1.35% instead of the 1.55% seen previously


Reverse channel stuffing.

ucsbcanuck's picture

Bullshi... I mean bullish - nearly messed up there!

BandGap's picture

I. for one, am pleased that it was a positive number. The last thing our country needs is a recession/depression.



firstdivision's picture

The sad part is that they take that as an invitation for QE3.  The idiots do not understand that when QE ends so does consumption. 

[integral]QE dx

High Plains Drifter's picture


and oh before i forget.............happy chanukah to everyone.........


who loves you baby?



Caviar Emptor's picture

Biflation: GDP grinds a little lower yet (1.8 from 2.0) , while final GDP price index grinds a little higher (2.6 from 2.5). Perfect. Happy Holidays

TooBearish's picture

Lookit claims are down this thing ready to ROCK!!!!  JOe Kernan said so...

Caviar Emptor's picture

Every year same BS: they defer the counting to January. 

search's picture

This has got to be, in the wake of $2 trillion bernanke bucks, a sign that fed printing will not lead the personal consumption index higher (nor house prices) but merely shift power to inflation hedged oil producing countries, no?

NOTW777's picture

only in an affirmative action obama economy can talking heads spew the spin that these numbers are wonderful.  according to their logic if GDP trends down to 1.5 things will really be looking up.  cramer and friends continuing to tout the "improving" economy

RobotTrader's picture

As usual.....


Gold and silver are the first items dumped over the side when a horrific GDP number is released.



- U.S. Dollars

- U.S. Treasuries

- Shopping Mall REITs

- Specialty retailers like CMG

Did I miss anything?

Might as well call General Jim to see if he will hold my hand.


fuu's picture

RobotTrader, the Barclays of Zero Hedge.

kito's picture

hows that "consumer stronger than ever" thing working out for you robo?

SoNH80's picture

Deflationary pressures in a recession, that's defensible.  But loading up on Shopping Mall REITs?  And Chipolte, the absurdly overvalued (52 P/E) vendor of overpriced tacos?????  You are able to make two contradictory arguments in a single post, and you ain't no genius, son.  Quit dosing on the California medicine, move to Stockton, and start encountering Real Life.

Alex Kintner's picture

OT: Matt Taibbi blog article - Obama and Geithner: Government, Enron-Style

Matt nails both their sorry asses for covering up the massive fraud...

This is exactly what Obama and Geithner are doing now. By continually lying about the extent of the country’s corruption problems, they’re adding fraud to fraud and raising such a great bonfire of lies that they probably won’t ever be able to fix the underlying mess.

Read more:

Captain Kink's picture

Imagine a world with no "growth". A world where we are not dependant on growth to keep increased debt (money creation) going and sustainable.  What if we had sound money?  and corporations and individuals either succeed or failed in growing their "earnings" based solely on merit (improved performance) and not on levered individuals and institutions artificially increasing every metric that our scorecards are now based on? The higher "scores" have nothing to do with realilty.  All this  supposed wealth and progress is a total fiction and without meaning.  The game is rigged at every level.  We  (and government)have cheated continuously and lied to ouselves for decades.  Living standards improve only to the extent that productivity increases and NOTHING ELSE.