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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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Thu, 09/29/2011 - 09:33 | 1721708 MFL8240
MFL8240's picture

Still negative growth after inflation.

Thu, 09/29/2011 - 09:47 | 1721747 janus
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,


Thu, 09/29/2011 - 10:03 | 1721783 BetTheHouse
BetTheHouse's picture

Here's a message: Shut the fuck up.

Thu, 09/29/2011 - 10:16 | 1721788 slewie the pi-rat
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!

Thu, 09/29/2011 - 12:10 | 1722197 A_Mutz
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?

Thu, 09/29/2011 - 09:36 | 1721712 GeneMarchbanks
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.

Thu, 09/29/2011 - 09:57 | 1721771 SheepDog-One
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.

Thu, 09/29/2011 - 09:37 | 1721714 Careless Whisper
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The Careless Whisper Morning Report


GoldmanSachs Hit Men "Eliminate" Trader Alessio Rastani In Taiwanese Animation

Verizon Adds 1 Million Fake Customers; Verizon Franchisee Accused Of Fraud

Mexican Supreme Court: "Life Begins At Conception"; Acts To Protect Unborn Children

"Fast And Furious" Guns Show Up In El Paso Texas,0...

Dubya Gets A Hard Workout At Gay DC Gym

See Something Say Something? 20,000 Abandoned Suitcases At Florida Airports,0,...

Police Chief Accidentally Texts She-Male Porn To Constable Running Against Him

China Advances Space Station

Teen: I Drink My Boyfriends Blood, And His Friends Blood, I'm A Vampire; Denies Murder Charge

Palm Beach County Sheriff's Deputy Charged With Grand Theft Auto

Thu, 09/29/2011 - 09:44 | 1721739 ISEEIT
ISEEIT's picture

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

Thu, 09/29/2011 - 10:00 | 1721780 snowball777
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").

Thu, 09/29/2011 - 10:08 | 1721791 Spastica Rex
Spastica Rex's picture

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

Thu, 09/29/2011 - 10:23 | 1721828 HelluvaEngineer
HelluvaEngineer's picture

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

Thu, 09/29/2011 - 09:38 | 1721717 Gandalf6900
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!!!!

Thu, 09/29/2011 - 09:50 | 1721755 SheepDog-One
SheepDog-One's picture

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

Thu, 09/29/2011 - 09:39 | 1721720 nontaxpayer
nontaxpayer's picture

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

Thu, 09/29/2011 - 09:39 | 1721722 disabledvet
disabledvet's picture

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

Thu, 09/29/2011 - 09:41 | 1721729 dpr10
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??

Thu, 09/29/2011 - 09:50 | 1721754 Johnny Lawrence
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?

Thu, 09/29/2011 - 09:58 | 1721776 SheepDog-One
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'.

Thu, 09/29/2011 - 10:10 | 1721794 Spastica Rex
Spastica Rex's picture

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

Thu, 09/29/2011 - 10:25 | 1721832 Joe Shmoe
Joe Shmoe's picture

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

Thu, 09/29/2011 - 10:05 | 1721789 adr
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.

Thu, 09/29/2011 - 10:25 | 1721835 CrashisOptimistic
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.

Thu, 09/29/2011 - 09:41 | 1721730 Robslob
Robslob's picture



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

Thu, 09/29/2011 - 10:38 | 1721860 RealFinney
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.

Thu, 09/29/2011 - 09:41 | 1721733 TradingJoe
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 guessed it WINDOW DRESSING unless well unless something "bad" happens :)))

Thu, 09/29/2011 - 09:43 | 1721734 ISEEIT
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.

Thu, 09/29/2011 - 09:46 | 1721745 Robslob
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!

Thu, 09/29/2011 - 09:46 | 1721742 kito
kito's picture

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

Thu, 09/29/2011 - 09:48 | 1721749 PulauHantu29
PulauHantu29's picture

Much better....mmmmmmm...

Thu, 09/29/2011 - 09:50 | 1721752 Dick Darlington
Dick Darlington's picture








Thu, 09/29/2011 - 09:50 | 1721753 Jayda1850
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!

Thu, 09/29/2011 - 09:51 | 1721759 SheepDog-One
SheepDog-One's picture

Ive got my Kegerator filled with Everclear.

Thu, 09/29/2011 - 09:54 | 1721766 TradingJoe
TradingJoe's picture

I got Loewenbraeu! :)))

Thu, 09/29/2011 - 09:50 | 1721756 jjsilver
jjsilver's picture

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

Thu, 09/29/2011 - 09:51 | 1721757 dick cheneys ghost
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...........

Thu, 09/29/2011 - 09:54 | 1721763 Caviar Emptor
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. 

Thu, 09/29/2011 - 09:54 | 1721765 Tsar Pointless
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.

Thu, 09/29/2011 - 09:55 | 1721768 Arkaenun
Arkaenun's picture

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

Thu, 09/29/2011 - 09:58 | 1721774 Jayda1850
Jayda1850's picture

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

Thu, 09/29/2011 - 09:58 | 1721773 adr
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.

Thu, 09/29/2011 - 10:53 | 1721893 Pegasus Muse
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.


GoldMoney Closing All Dutch Accounts

September 28th, 2011

Dear Valued Customer,

It is with tremendous regret that I am writing to inform you of our recent decision to discontinue offering our services to all customers resident in the Netherlands. Please note, we at GoldMoney have explored all possible options to prevent this outcome, and this is not a decision we have taken lightly. This position is unique to the Netherlands, and unfortunately because you are resident in the Netherlands, you are one of those affected, which we very much regret. Kindly allow me to explain our position:

On 27 January 2011, we were contacted by the Autoriteit Financiële Markten (AFM), the Netherlands financial regulator, which indicated that, in its view, GoldMoney was “offering investment objects in the Netherlands without a licence” in breach of Section 2:55 of the Netherlands Financial Supervision Act (Wet op het financieel toezicht, Wft). At the end of 2010, the AFM first announced publicly its policy viewpoint that investments in precious metals could – under certain circumstances – be characterised as offering of investment objects. The AFM demanded that we cease to do so until we agreed to subject our business to their regulation by applying for a licence as an offeror of investment objects within the meaning of Section 2:55 Wft. Although we disagreed with the AFM’s assessment, we voluntarily offered to stop accepting new Netherlands-resident customers as of 1 February 2011 until we could resolve this matter with the AFM.

We have dedicated the last few months to working with our Netherlands lawyers to present our case to the AFM, namely that precious metals are not included within the concept of “investment objects” regulated by the AFM, and that, in any case, Netherlands regulation is not applicable to GoldMoney because we do business in Jersey, rather than within the Netherlands. Unfortunately, we have been unsuccessful in changing the AFM’s view on this matter. As we do not want to subject ourselves, and by extension our customers, to unnecessary and unpredictable regulatory requirements, we have reached the difficult conclusion that the only way to resolve this situation is to cease all business with Netherlands-resident customers.

We intend to resolve this issue and return to doing business with residents in the Netherlands in the future. Should this be the case we will make an announcement. But in the meantime, unfortunately, I am very sorry to inform you that we are unable to offer you our services any longer. Subject to article 10-A of our Customer Agreement, we will require you to close your GoldMoney Holding. This is to occur no later than the close of business on Monday 31 October 2011.
We have outlined below a number of possible options for how you may liquidate your current position, including the physical delivery of small gold bars to your home address or a sale to cash with a free transfer of the proceeds to your bank account.

By offering you the option to take physical delivery of your gold, we hope to fulfil your expectations with regards to the physical ownership of your metals. We thank you for your business and the trust you have placed in us.

Geoff Turk
CEO – GoldMoney

Thu, 09/29/2011 - 13:17 | 1722508 A_Mutz
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. 

Thu, 09/29/2011 - 09:58 | 1721775 HedgeAccordingly
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

Thu, 09/29/2011 - 10:12 | 1721804 adr
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.

Thu, 09/29/2011 - 10:11 | 1721797 Gandalf6900
Gandalf6900's picture

European financials exploding...bearish

Thu, 09/29/2011 - 10:20 | 1721798 Clint Liquor
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!

Thu, 09/29/2011 - 10:12 | 1721801 RobotTrader
RobotTrader's picture

XLF up

XAU down

TPTB has everything in full control.

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

Thu, 09/29/2011 - 10:24 | 1721830 HelluvaEngineer
HelluvaEngineer's picture

are you red/green color blind?

Thu, 09/29/2011 - 10:44 | 1721885 toady
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!

Thu, 09/29/2011 - 11:55 | 1722132 kito
kito's picture

sorry bro, but you must be shopping where simon black shops for coins. sounds way too high to me

Thu, 09/29/2011 - 12:07 | 1722188 toady
toady's picture

Me too, thats why I haven't btfd yet... Looks like I'll be forced to use some online weasels, pay a bunch for shipping & such, and pray it doesn't get 'lost in transit'.

Still, its interesting that main street has decoupled... Will they get back in line with the markets, or is this one of the seven signs of the apocolyse?

Thu, 09/29/2011 - 10:13 | 1721805 Caviar Emptor
Caviar Emptor's picture

Look on the bright side. Who would of ever thought that going to a Halloween party dressed as a Fed Chairman would scare people? 

Why is Ben calling unemployment a national crisis when exporting jobs has been a National Policy for nearly 4 decades? Just this week alone two key US companies (YUM, K)  announced plans to expand overseas and contract domestically. And since our national "recovery' of 09-11, that trend has been the only game in town. 

Thu, 09/29/2011 - 10:16 | 1721812 GoldbugVariation
GoldbugVariation's picture

Good US economic news is bad for stocks as it reduces the likelihood of QE3 any time soon.

Thu, 09/29/2011 - 10:19 | 1721818 Steverino
Steverino's picture

Interesting how PCE in Table 2.3.1. Percent Change From Preceding Period in Real Personal Consumption Expenditures by Major Type of Product falls from 2.1 to 0.7


one would think the consumer was no longer part of GDP...

Thu, 09/29/2011 - 10:21 | 1721824 Jayda1850
Thu, 09/29/2011 - 10:25 | 1721834 High Plains Drifter
High Plains Drifter's picture

cramer has been pumping netflix all week and now it is dropping like a rock. imagine that.

Thu, 09/29/2011 - 10:30 | 1721844 Jayda1850
Jayda1850's picture

Thank god Cramer is off. Seriously, 9am is way too early to deal with that idiot everyday.

Thu, 09/29/2011 - 10:27 | 1721840 The Axe
The Axe's picture

worse fucking TAPE...I have ever seen on a up 230 day....watchout

Thu, 09/29/2011 - 10:28 | 1721841 Flounder
Flounder's picture

Breaking News.  CNBC Still a Shill for GE

Just saw a glamorous ad for Sunpower on CNBC.


Sunpower and General Electric Energy Financial Services are partnering to build solar power installations generating 8 megawatts in California by the end of the year.

The five projects include what could become the nation's largest solar panel installation on one roof, capable of 2.3 megawatts, at Toyota Motor Sales' Parts Center. Construction is set to start next month.

GE Energy Financial Services is acquiring a majority equity interest in the projects for an undisclosed amount. It will own the systems built and run by SunPower, a maker of high-efficiency solar panels.


“At a board meeting that was dealing with nothing but the solar people, they bought you,” Wilson told the board.


Thu, 09/29/2011 - 10:33 | 1721849 Jayda1850
Jayda1850's picture

They will be just fine. Anyone betting Sunpower will be the next beneficiary of DOE loans at the direction of the Obama administration?

Thu, 09/29/2011 - 10:31 | 1721845 monopoly
monopoly's picture

Yup, this is one sick market.

Thu, 09/29/2011 - 10:31 | 1721847 AldoHux_IV
AldoHux_IV's picture

With all the debt in the world, this is still very far from breaking even, but seeing how the markets only care about being fooled by the pretty numbers and soundbites from headline to headline (and the fact the fed/central banks are manipulating the shit out of the markets) the same charade goes on until sovereigns inevitably have to default.

Thu, 09/29/2011 - 10:32 | 1721848 firstdivision
firstdivision's picture

Buy close.  Sell open.  Retire.

Thu, 09/29/2011 - 10:42 | 1721875 Mr_Wonderful
Mr_Wonderful's picture

This is ho-hum growth at best.

Now, a few natural disasters with damage to the tune of say $500 billion in Q4 would really save the year.

Thu, 09/29/2011 - 12:14 | 1722211 A_Mutz
A_Mutz's picture

I keep hearing that the US is in a recession.  If we get 2.5% GDP next quarter i guess that's wrong?  How long will it take to get a negative GDP print?  Years?

Thu, 09/29/2011 - 12:54 | 1722335 SoNH80
SoNH80's picture

+2.5% Q3 GDP?  Not happening.  July was the inflection point.  We are in recession right now, of the 1991 style (-0.5% Q3 GDP --> official numbers; -2.5% to -4.5% Q3 GDP, real numbers).  In today's debt deleveraging environment, there is little cushion bt/w slow growth (official numbers) and recession.  Consumers slammed on higher oil prices (through 2010-2011), the effect of which will only intensify through Q4 (despite slightly lower high-80s prices) due to financial stress (gasoline for commuting, or go shopping?).  A bad Winter Solstice Consumption Binge aka Christmas is forthcoming.  Ironically, New England is holding up well thanks to high military hardware spending, but the Midwest/West/non-Tx./Okla. South are tottering.  Nominal/official "growth" to resume next spring, with the warm weather and lower oil price-related relief, barring any, AHEM, "unforseen events" in the banking sector, which are foreseeable these days.  This is the pattern RECESSION --> OIL PRICE DROP ----> MILD RECOVERY IN CONSUMER SPENDING ---> OIL PRICE SPIKE  ----> RECESSION  , rinse and repeat for the foreseeable future, and oh yeah, Housing still is, and will be, in the toilet for a very long time.

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