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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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Thu, 12/22/2011 - 09:48 | 2003804 Schmuck Raker
Schmuck Raker's picture

The resumption of consumption was an assumption...

Thu, 12/22/2011 - 09:49 | 2003807 Temporalist
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.

Thu, 12/22/2011 - 11:33 | 2004064 economics1996
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.

Thu, 12/22/2011 - 11:52 | 2004128 economics1996
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.

Thu, 12/22/2011 - 10:13 | 2003860 The Limerick King
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


Thu, 12/22/2011 - 10:28 | 2003902 TheSilverJournal
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

Thu, 12/22/2011 - 10:44 | 2003949 eureka
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!

Thu, 12/22/2011 - 11:36 | 2004075 economics1996
Thu, 12/22/2011 - 09:50 | 2003808 HelluvaEngineer
HelluvaEngineer's picture

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

Thu, 12/22/2011 - 10:02 | 2003832 firstdivision
firstdivision's picture

Fuck CMG, its all about LULU

Thu, 12/22/2011 - 09:50 | 2003809 search
search's picture

Leading some to a resumption of stock dumption

Thu, 12/22/2011 - 09:50 | 2003810 espirit
espirit's picture

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

it's bullish, right?

Thu, 12/22/2011 - 11:42 | 2004094 economics1996
economics1996's picture

Y = C+I-G+NX.  Correct.

Thu, 12/22/2011 - 09:51 | 2003813 Everybodys All ...
Everybodys All American's picture

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

Thu, 12/22/2011 - 10:06 | 2003845 Sudden Debt
Sudden Debt's picture

Next time will be better

Thu, 12/22/2011 - 10:39 | 2003935 Temporalist
Temporalist's picture

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

Thu, 12/22/2011 - 10:10 | 2003853 John Law Lives
John Law Lives's picture

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

Thu, 12/22/2011 - 10:20 | 2003878 fuu
fuu's picture

A smoking hole in the ground?

Thu, 12/22/2011 - 10:24 | 2003887 John Law Lives
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.  

Thu, 12/22/2011 - 11:44 | 2004104 economics1996
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.

Thu, 12/22/2011 - 11:57 | 2004140 economics1996
economics1996's picture

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

Thu, 12/22/2011 - 12:40 | 2004248 John Law Lives
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.

Fri, 12/23/2011 - 00:35 | 2006430 ThrivingAdmistC...
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.

Thu, 12/22/2011 - 09:52 | 2003815 Dick Darlington
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.

Thu, 12/22/2011 - 12:21 | 2004198 rwe2late
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.”

Thu, 12/22/2011 - 09:53 | 2003816 Esso
Esso's picture

Crappin' out, bitchez!

Thu, 12/22/2011 - 09:56 | 2003819 Irish66
Irish66's picture

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

Thu, 12/22/2011 - 10:02 | 2003833 jay28elle
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.


Thu, 12/22/2011 - 14:42 | 2004706 Non Passaran
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)

Thu, 12/22/2011 - 11:28 | 2004051 roadhazard
roadhazard's picture

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

Thu, 12/22/2011 - 09:59 | 2003822 Jlmadyson
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.

Thu, 12/22/2011 - 11:47 | 2004115 economics1996
economics1996's picture

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

Thu, 12/22/2011 - 09:57 | 2003824 High Plains Drifter
High Plains Drifter's picture

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

Thu, 12/22/2011 - 11:36 | 2004076 mayhem_korner
mayhem_korner's picture

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


Reverse channel stuffing.

Thu, 12/22/2011 - 09:59 | 2003825 ucsbcanuck
ucsbcanuck's picture

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

Thu, 12/22/2011 - 09:59 | 2003826 BandGap
BandGap's picture

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



Thu, 12/22/2011 - 10:00 | 2003827 firstdivision
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

Thu, 12/22/2011 - 10:01 | 2003830 High Plains Drifter
High Plains Drifter's picture


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


who loves you baby?



Thu, 12/22/2011 - 10:03 | 2003834 Caviar Emptor
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

Thu, 12/22/2011 - 10:02 | 2003835 TooBearish
TooBearish's picture

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

Thu, 12/22/2011 - 10:04 | 2003839 Caviar Emptor
Caviar Emptor's picture

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

Thu, 12/22/2011 - 10:04 | 2003838 search
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?

Thu, 12/22/2011 - 10:05 | 2003840 NOTW777
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

Thu, 12/22/2011 - 10:05 | 2003842 RobotTrader
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.


Thu, 12/22/2011 - 10:14 | 2003862 High Plains Drifter
High Plains Drifter's picture


Thu, 12/22/2011 - 10:27 | 2003898 fuu
fuu's picture

RobotTrader, the Barclays of Zero Hedge.

Thu, 12/22/2011 - 10:27 | 2003900 kito
kito's picture

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

Thu, 12/22/2011 - 11:13 | 2004019 SoNH80
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.

Thu, 12/22/2011 - 10:06 | 2003843 Alex Kintner
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:

Thu, 12/22/2011 - 10:10 | 2003850 Captain Kink
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.  

Thu, 12/22/2011 - 13:03 | 2004289 Spigot
Spigot's picture

Then it would be impossible to wage unlimited war and provide unlimited social welfare benefits.

Thu, 12/22/2011 - 10:09 | 2003851 Tsar Pointless
Tsar Pointless's picture

This is one temporary worker who will be added to the weekly claims report for week-ending January 7, 2012. I'm going to ring in the New Year by filling out a New Application for UC benefits.

GDP=Gross Debt Product

As for consumption...

Definition of CONSUMPTION (from meriam-webster) 1a : a progressive wasting away of the body especially from pulmonary tuberculosis   I'd say consumption is doing just fine in Amerikkka.
Thu, 12/22/2011 - 11:06 | 2003995 RobD
RobD's picture

I may be joining you there Tsar. Things have really slowed down at my job in the last month. I program slot machines for a major gaming company and I have been sitting on my butt for the last month without a game to work on. I talked to my friend who manages the graphics dept(that is where the games start out) and they have nothing on the schedule for my group through next month. Funny thing is we had a dog and pony show last month put on by one of the big cheeses and he said he was going to be approving a bunch of recs for new hires. I'm off next week for vacation but I'm not sure I will have a job when I get back.

Thu, 12/22/2011 - 10:10 | 2003855 overmedicatedun...
overmedicatedundersexed's picture

new footnote to the security bill giving Obuma the right to kill you w/o trial..any American citizen not willing to increase buying by 10% y/y is a terrorist and may be jailed w/o trial.

be patriotic buy buy buy..or jail

Thu, 12/22/2011 - 10:15 | 2003867 search
search's picture

Now do you expect infinite printing and gold to the moon?

Thu, 12/22/2011 - 10:19 | 2003873 Everyman
Everyman's picture

OK, but does this include the revision of GDP downwards because of the NAR bullshit??  Remember they said since 2007 they averaged a 14% overcount of home sales.  A little research shows this:

Historically, residential investment has averaged roughly 5 percent of GDP while housing services have averaged between 12 and 13 percent, for a combined 17 to 18 percent of GDP.

So that is a pretty big "whoops"!  My guess is this "miss" also does not include a further 20% reduction, not only because of houses but because of "refridgerators, we gotta move these color TVs", (Dire Straights), for 5 years!  And more:

Construction of new homes is part of the investment component of GDP.  Residential fixed investment (RFI) totaled $425 billion in 2000, representing 4.3 percent of GDP and 24.1
percent of gross private domestic investment. New conventional single family and multifamily structures accounted for $249 billion, or 59 percent of RFI.

Double whammy, it is also figured into the GDP because it in in RFI as well.  I just wonder about all the other lies in GDP that are not real either like the "Car sales" where these idiots count the number of cares on the car lot as "sold", instead of counting the ones actually "sold"?


Thu, 12/22/2011 - 10:27 | 2003899 RoadKill
RoadKill's picture

Hmm bearish GDP vs bullish Claims and bullish outlook for Q4.

Wonder which one wins. You could argue GDP is backwards looking and claims are forward looking, or you could argue claims are seasonally adjusted out the wazoo.

I REALLY hope that Gallop report is right on jobs being massively inflated and set to drop off a cliff as the season adjustments flip. Otherwise Im too short for this shit.

Thu, 12/22/2011 - 10:32 | 2003913 in-Credible Banker
in-Credible Banker's picture

I don't know why the doom and gloom among you all.  Everything is BEAUTIFUL baby!


I mean - this truly is journalism at its very finest......




Thu, 12/22/2011 - 11:15 | 2004023 NOTW777
NOTW777's picture

is there anything lower than yahoo

Thu, 12/22/2011 - 12:24 | 2004210 pods
pods's picture

Wow, lots of Hopium being spread around Yehoo!

That picture of that poor sap was perfect. She will be pushing that shopping cart around in about a year, but instead of gifts, it will be what she has left.

I wonder if they get paid by the piece or for each individual positive adjective.

Might be a good gig?

"Things are looking up."  Exactly what the guys on that boat in A Perfect Storm said too.


Thu, 12/22/2011 - 10:34 | 2003918 Shizzmoney
Shizzmoney's picture

Merry Christmas - the economy is improving and what not.

Basically sentiments from my CEO at our XMas party: "The economy is getting better, but you guys aren't getting a XMas bonus or a raise next year.  Happy Holidays!".

Wonder if the MSM is going to report this revision on GDP (that are becoming more frequent than sports figures in the news being involved in child molestation) with as much vigor when they "cheered" the slight uptick that was reported when the first Q3 GDP numbers came out a month or so ago.

GDP don't mean shit, as shown in this interview by Dylan Ratigan and Umair Haque of the Havas Media Lab:

Thu, 12/22/2011 - 10:35 | 2003919 spastic_colon
spastic_colon's picture

why go to all this will be a 1%+ green day....just watch euroland <sarc>

Thu, 12/22/2011 - 10:40 | 2003938 the not so migh...
the not so mighty maximiza's picture

all that money printing got them nothing

Thu, 12/22/2011 - 10:45 | 2003951 valley chick
valley chick's picture

Fitch putting the US on a downgrade warning again?  Saw it on Ampex newsletter.

Thu, 12/22/2011 - 10:47 | 2003954 Hobbleknee
Hobbleknee's picture

DON'T FORGET, KIDS:  All of congress' bogus budget fixes were based +4% GDP over the next 10 years.

Thu, 12/22/2011 - 11:08 | 2003999 Rynak
Rynak's picture

Ben prints 10% more cash, and consumer spending "increases" by 1,2%. I wonder what this could mean.

Thu, 12/22/2011 - 11:24 | 2004043 Snakeeyes
Snakeeyes's picture

Now you can understand Bernanke's whining about consumers.

Bernanke’s Plea to Consume (Not Save) and the Conflicting Economic News: The Good, The Not-So-Good and The Expected (Housing)

Thu, 12/22/2011 - 11:34 | 2004066 mayhem_korner
mayhem_korner's picture



BLS - perfect record of upward revisions!  51-0 with only one week left in the season.  Packers can't claim that.

Thu, 12/22/2011 - 13:13 | 2004311 Spigot
Spigot's picture

When you're good, you're good!

Do NOT follow this link or you will be banned from the site!