Q2 GDP Revision Better But Doesn't Meaningfully Change Prospects For Q3

Tyler Durden's picture

Stone & McCarthy just posted a brief interpretation of the better-than-expected 3rd revision to Q2 GDP noting that the magnitude of revisions do little to improve expectations for Q3. Key takeaways include: Upside Q2 GDP revisions driven in large part by PCE Services; Inventories revised downward setting stage for Q3 restocking; and Q3 GDP looks to be in the 2.5% area. Little wonder markets are hardly overwhelmed and talking heads aren't spinning this into 2012 recovery and Fed Funds futures didn't budge - though for now ES keeps pushing higher into the open - though admittedly feeling squeezed right now by the apparent slew of better-than-expected news - brought to you via Sesame Street and the letter 'J': [J]ermany, Jobs, and [Jee]DP.

Via Stone & McCarthy:

The Third Estimate of Q2-11 GDP revealed a 1.3% rate of gain up from +1.0% per the Second Estimate, and the same as the 1.3% per the Advance estimate.


The revisions that were incorporated into the Third estimate do not materially change the outlook for Q3 GDP. Inventories were revised downward slightly making the case for more restocking in Q3, but the downward revision was small enough that such should not materially change the Q3 outlook from what appeared to have been on track.


While we look forward to digesting a bit more of the Q3 data in the weeks ahead, we think Q3 GDP is shaping up to be in the 2-1/2% zone.


There were 3 GDP components that drove the 0.3% upward revision.


(1) The contribution from the PCE for Services was revised upward from +0.64% to +0.87%, adding 0.23%.


(2) The Nonresidential Structures contribution was revised upward to +0.54% from +0.38%, adding 0.16%.


(3) The contribution from Net Exports was revised upward to +0.24% from +0.09%, adding 0.15%.


There were small declines in the contributions from Equipment & Software (-0.11%), Inventories (-0.05%), and the PCE fof Goods (-0.5%).


GDP growth over the first half of 2011 was a disappointing 0.9%, we look for the second half to do somewhat better at 2% to 2-1/2%, certainly far from robust.


The earlier downward revisions to GDP from the annual benchmark revisions released in late July, and the associated downward revisions to Productivity, suggest that maybe the trajectory of Potential GDP is somewhat lower than earlier thought. This may mean that our yardsticks by which we evaluate the appropriateness of GDP growth should be adjusted accordingly.


Not exactly an optimistic tone - especially in light of last night's perspective from Citi on global growth.

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MFL8240's picture

Still negative growth after inflation.

janus's picture

sorry, MFL -- had to seize a top-spot for this one (this is something janus NEVER does; but in this case i felt bold action necessary). 



take dead aim, bitchez! janus is scopin you crusty cunts of greenwich out; you bitchez can't buy backbone, and janus won't let you forget it!

thanks, mr. bloom, i really think you're right about rushmore,


BetTheHouse's picture

Here's a message: Shut the fuck up.

slewie the pi-rat's picture

inflation~~~the latest FED "twist"

much of the analysis tyler posts, yesterday, our friend peter tchir, i thought, fails to account for the new centrally-planned econom and the almost absolute powers of the chairsatan over "banking" since the last "banking" debacle

thus, the SNB devaluation & euro-peg looks like centralBanskster cabal collusion and one heluva move, in historical market-perspective

now, it seems, the transitory inflation has now given way to transitory deflation

wtf~~i told ya theese guys were good! 

anyhow, re: the politics of the europeon bailout & germany's central role:  merkel can do this w/ deflation;  with inflation, the germans would never put up with this shit;  with deflation, they can't wait to get in line and let the banksters re-fi and save the EU "system", too!  greece is negotiable, it seems

there will be QE, but it may not come directly from the FED but from other centralBanksters in the franchise structure

meanwhile the strength of the dollar in the face of this "other" printing is deflationary, but only transitorially so, i would think, in terms of the centrally-planned and managed "capitalist" econom and world-class freaking fiat

perhaps we'll even be treated to prez0 campaigning on the strong dollar under his masterful tutelage, too!

A_Mutz's picture

Everything I read on this site states that the US Ecomony is in a recession.  Who's right?  Or is 2.5% GDP growth a recession?

GeneMarchbanks's picture

Great, we're looking good then? Someone tell those goons on Wall St to go home now it's all been fixed.

SheepDog-One's picture

Yep, its all fixed now, Bernank can stop the ZIRP, the HFT, the hand holding of bond rates daily and they can all go home....we're recovered.

Careless Whisper's picture

The Careless Whisper Morning Report


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ISEEIT's picture

I like what you do. Keep it up and thanks for the time you put into it :)

snowball777's picture

Dubya Gets A Hard Workout At Gay DC Gym

He just wanted to find a community that understands what it's like to choke (on "pretzels").

Spastica Rex's picture

GW hasn't caught teh gay. He caught teh stoopid many, many years ago.

HelluvaEngineer's picture

"I like you people but I'm still gonna beat the hell out of y'all"

Gandalf6900's picture

fix unemployment......check

improve economy and domestic production.....check

monitor blogs and make sure they don't talk shit about me.....check

get my minions to print more fiat....check

send warren his bubble soap.....check

wash my underpants....wash my underpants!!!!

SheepDog-One's picture

Wipe out any plausible pretext for needing QE3,4,or 5....check.

nontaxpayer's picture

Always sensible to see how John Williams interprets the figures...due today.

disabledvet's picture

In other economic news "weather today: rain...with chance of clouds no less."

dpr10's picture

how can you expect 2-2.5% growth in the second half when all the ISM numbers are headed downhill?? and the auto production is worse than expected in August??

Johnny Lawrence's picture

Yes, I don't get this either.  Maybe I don't understand all the GDP components.  All the economic data has been deteriorating.  Someone care to explain?

SheepDog-One's picture

What makes me laugh is here in the day of HFT nano second trading, we go by numbers months old as 'new data'.

Spastica Rex's picture

Yeah, I thought the market was supposed to be "predictive."

Joe Shmoe's picture

The market's saying pretty clearly that the economy is stuck.  Not going up, not crashing.  Just slow sideways grinding.  

adr's picture

When GDP includes a government component it can truly be any number they wish. All those government paid traffic cones during the summer count towards GDP. If the jobs bill passed the governemnt portion of GDP would explode giving a nice 2% boost for a quarter or two.

Can you imagine the stock market reaction to headlines like that. That is how we went on a 90% surge in 2009. It didn't matter that the macro picture deteriorated over the entire time the market went on its record setting run. The Gov had the markets back.

If you removed government support real GDP has been contracting since 2007.

CrashisOptimistic's picture

Might want to remember that Q1's revisions were 1.2, 1.1, 1.3 and final look said 0.4%.  

Generally speaking, civil servants get up and shave in the mirror and when they are looking at themselves, they need at least something to lean on to keep on looking at themselves.  That something is Final Revision.  They will tolerate bullshit as long as they are assured the number will get fixed later.

Robslob's picture



GDP back in Q2...back when things were good and Greece was solvent....ahhh the good ol' days!

RealFinney's picture

The last time Greece was solvent they'd just looted Troy and Odyesseus was telling his wife he'd be home in time for tea.

TradingJoe's picture

most blantant window dressing i have ever seen :))) volume is litteraly non existent :))) and THEY SELL like crazzzzzyyyy :))) expect to see friday much the same then next week we dive dive dive...until options expirations and then we rise rise rise for monthly ...you guessed it WINDOW DRESSING unless well unless something "bad" happens :)))

ISEEIT's picture

Ben will print alright & it ain't gunna matter. EUR is about to drop like obama. Check this link and before you laugh it off have a look at the source. This is no FT 'rumour'.

Seriously...........HAVE A LOOK.



Robslob's picture



This would fit perfectly with the 1st time ever 5 Central Bank coordinated bail-out by The Fed, BOJ, SNB, ECB and .....


It doesn't matter.... for the love of God man just print something...anything!

kito's picture

the bernankster laughs at those who believe his time will come to an end!!!!  bwaaaahhhaaahahhahhaaaaaa  he will live on foreverrrrrrrrrrrrrrr......... bwaaahhhahhahhahahah

PulauHantu29's picture

Much better....mmmmmmm...

Dick Darlington's picture








Jayda1850's picture

Thank god I got my kegerator setup this past weekend. Nothing like cold beer on tap to drown out all the fake numbers. Fuck hopium, give me a glass of HOPium!

SheepDog-One's picture

Ive got my Kegerator filled with Everclear.

jjsilver's picture

All Government numbers are suspect, they have been caught lying numerous times

dick cheneys ghost's picture

Take a look under the surface and you will see the states and cities are still broke and new york and philly are now warning of further cuts/layoffs/deficits going into 2012...........



Caviar Emptor's picture

Speaking for myself, I am overwhelmed by this powerful classic post-war expansion. V-Shaped! On steroids. Americans are living la vida loca once again, soon it will be illegal to make serious decisions while shopping. We are a service-oriented ownership society. We keep score with our stock market: it's the place where dreams are made. We are a nation of dreamers. 

Tsar Pointless's picture

And in other news, millions of people will care more that the Boston Red Sox and/or Atlanta Braves didn't make the Major League Baseball playoffs in Amerikkka than bother concerning themselves with such trivial matters as our country's GDP and some vote in some other country somewhere they can't even find on a map and that used to have a BAD BAD MAN as its leader.

Ya see - if your country is the greatest and most exceptional in the world, then by extension and direct correlation, you are great and exceptional. There's no way great and exceptional can be improved upon or made better.

So just sit back and relax, choose from our wide variety of breads, and enjoy our glitzy and glamorous circuses.

Arkaenun's picture

The market saw a bit of white powder on the coffee table, bent over, and took a sniff.

Jayda1850's picture

Like any other coke high, the come down is gonna be a bitch.

adr's picture

Don't you know, Europe is fixed now. verything can be solved by throwing money at a problem and expecting future generations to pay the tab. Not my problem is now the worldwide mantra.

GDP is one of the biggest fraud statistics published, even more than employment claims. The biggest problem with the market is that it trades on headlines, rumors, and talk of action. It shoots up 20% based on talk of things to come but when the talk never materializes it doesn't sell off, it just shoots higher on more talk.

All a stock needs to raly is some idiot analyst to come out and put a 20% higher price target on it. I'll never understand how saying a $35 stock should be $65 within 6 months makes it move to $60 in a few days based on no real data about the corporations sales. They are pretty much telling the corporation how much they need to fudge the books for the next quarter.

The stock market is just lies, backed by lies, made by pathological liars who have not told the truth for so long that they believe lies to be the truth. The biggest lie is that you can solve a debt problem by going deeper in debt. Somehow the entire world now believes you can.

Pegasus Muse's picture
This is what happens when over-reaching unaccountable bankrupt governments, in an attempt to squeeze every last nickel out of their citizenry, go on the offensive.  Cut off all avenues of escape.  Time is running out for people to protect their savings.


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A_Mutz's picture

I totally agree.....knowing all this, why would anyone be short the market.  Seems like you'd be playing poker at a table with a short stack against 6 sharks!  The market is completely rigged. 

HedgeAccordingly's picture

gotta love the 3 percent up move in crude oil in 55 minutes... 

5 min ES wedge still holding.. bearish .. today looks like a fade 


adr's picture

And people wonder why gas hasn't dropped at all. t is still priced around $95 a barrel becuase all it takes is one day to getback there. Nobody trusts the $80 price because it hasn't stayed there longer than a day. The manipulation is so unbelievable, I don't understand how it can continue.

Printing in Europe should drive the US stock market down a few thousand points since that will destroy the foreign profit component of the BS earning reports. But who are we kidding printing Euros will be spun as bullish for the Euro and send the dolar ever lower. Or companies will just do what they always do and make upcustomers and sell to phony corporations.

Only another lie can keep a lie going. One truth will destroy the market in a day.

Gandalf6900's picture

European financials exploding...bearish

Clint Liquor's picture

For those confused about Gold's role, Bridget will explain it to you:



 Tyler, you need to put this on the front page. It will go viral!

RobotTrader's picture

XLF up

XAU down

TPTB has everything in full control.

Markets once again ruled by "Paper", not "Physical"

HelluvaEngineer's picture

are you red/green color blind?

toady's picture

On mainstreet silver is $38 and gold is $1800 an oz.

What is paper worth? Alot less from what I see... And then when you try to redeem that paper? Well, good luck!