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Q3 Advance GDP Prints At 2.5% In Line With Expectations; 100% Debt-To-GDP Threshold Postponed By 45 Days

Tyler Durden's picture




 

Advance Q3 was expected to print at 2.5%; it printed at 2.5%. Nothing too surprising in the constituent factors, aside from the fact that this was the biggest QoQ jump in GDP since Q4 2009. What drove it? A massive surge in PCE which increased from 0.5% to 1.72% as a portion of annualized GDP: in other words, as consumer confidence hit a near record low, and as the stock market plunged to 2011 lows, somehow Americans spent $130 billion annualized over and on top what they spent in Q2. In fact, standalone PCE was 2.4%, substantially higher than the forecast 1.9% and the previous 0.7%. Where this spending power came from, we would be delighted to know. Also notable is that the government contribution to Q3 annualized GDP was precisely 0.00% - the first time in 4 quarters in which it has not been a drag on "growth." In fact the only two growth detractors were Imports and a 1.08% drop due to change in Private Inventories, even though as we pointed out yesterday using another data series, Inventories just hit a new all time high. Probably the only actual news here is that total US GDP is now "suggested" to be $15,199 billion, up from $15,013. What this means is that the moment of 100% debt to GDP for the US has been pushed back from today, following the 7 Year auction, to a point in mid-December.

 

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Thu, 10/27/2011 - 08:50 | 1816723 HedgeAccordingly
HedgeAccordingly's picture

nearly PERFECT trend in the S&Ps this morning.. straight up in a compression wedge http://bit.ly/rPEvAL

Thu, 10/27/2011 - 08:51 | 1816724 Clueless Economist
Clueless Economist's picture

Are these green shits?

Thu, 10/27/2011 - 08:53 | 1816727 Flakmeister
Flakmeister's picture

2.5%, my ass..... This is beyond Orwellian

Thu, 10/27/2011 - 08:54 | 1816735 cossack55
cossack55's picture

No, this is some remarkably solid kicking-of-the-can.

Thu, 10/27/2011 - 08:59 | 1816752 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

If a can is kick perpetually, is it really can-kicking?... or just how the system works?

Thu, 10/27/2011 - 09:06 | 1816780 JohnG
JohnG's picture

Eventually (soon) that can hits a wall, and that wall is solid GOLD.

Thu, 10/27/2011 - 10:08 | 1817040 Panic Panic Panic
Panic Panic Panic's picture

That's one hell of a big can.

Thu, 10/27/2011 - 10:16 | 1817068 FEDbuster
FEDbuster's picture

Should be revised down to 1-1.5% in thirty days, but by then no one will care Black Friday will be all the buzz.

Thu, 10/27/2011 - 09:15 | 1816822 merizobeach
merizobeach's picture

"GDP is now "suggested" to be $15,[xyz] billion, up from $15,[abc]. What this means is that the moment of [x<1]00% debt to GDP for the US[uckAss] has been pushed [forward]...to a point in mid-[Nexnevber.]"

 

Little Timmy: "And now, for my next trick...."

Thu, 10/27/2011 - 09:55 | 1816979 MsCreant
MsCreant's picture

What kicking the can means today = extend and pretend

What kicking the can should mean = ass kicking

Thu, 10/27/2011 - 09:03 | 1816771 HD
HD's picture

They know you know. They are coming.

Thu, 10/27/2011 - 08:53 | 1816730 101 years and c...
101 years and counting's picture

all inflation.  the real economy is crashing in the background.

Thu, 10/27/2011 - 09:17 | 1816833 azzhatter
azzhatter's picture

MSM will never report this but it is solidly inflation that is driving GDP. 

Thu, 10/27/2011 - 11:45 | 1817392 mayhem_korner
mayhem_korner's picture

 

 

Bingo.  It's absolutely inflation.  But the economy is NOT, I repeat is NOT crashing.  It's well past crashing and into the burning and disintegration stages.

Thu, 10/27/2011 - 08:53 | 1816732 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

All is well... no need for the Bernank to print.

Thu, 10/27/2011 - 08:54 | 1816736 Cassandra Syndrome
Cassandra Syndrome's picture

Inflation spread over the GDP deflator. Oldest trick in the Keynesian book. Real GDP continues to fall.

Thu, 10/27/2011 - 08:55 | 1816741 machineh
machineh's picture

ECRI says RECESSION ... BEA says BOOM TIMES.

One of the two is flat-ass wrong.

Who you gonna believe -- the govt or your lyin' eyes?

Thu, 10/27/2011 - 08:59 | 1816753 Everybodys All ...
Everybodys All American's picture

Why then does 2.5% GDP feel like a recession? Practically everyone still refers to this time frame as the Great Recession and that includes many many articles over the last few months. Very hard to view this data as real.

Thu, 10/27/2011 - 09:06 | 1816754 Archimedes
Archimedes's picture

Where do American's keep getting all of this cash from? Truly amazing. I wonder if they are tapping their 401K's to make end meet. Perhaps that is why all of these equity outflows are occuring. But hey what the hell do I know. Perhaps there are magical skittle shitting unicorns. If so I definitely want one for the Holiday's!

Thu, 10/27/2011 - 09:06 | 1816781 papaswamp
papaswamp's picture

"Real disposable personal income decreased 1.7 percent, in contrast to an increase of 0.6 percent."
"The personal saving rate -- saving as a percentage of disposable personal income -- was 4.1 percent in the third quarter, compared with 5.1 percent in the second."

Savings rate continues to decline.

Thu, 10/27/2011 - 09:35 | 1816898 Archimedes
Archimedes's picture

Ah Consumers are tapping their savings and levering up again. The crack up boom is here. Like I said a few days ago "The market will rise to 12K before the end of the week and 12,700 before Christmas.(I was severely JUNKED for it) but seems I was correct...sigh. Prepare for a 300 point day in the DOw.

Thu, 10/27/2011 - 09:09 | 1816793 MsCreant
MsCreant's picture

Skittles are too sweet and unhealthy. And they do come out of a butt...

That 401K may be the Unicorn in question though. Shit, get it now while it is worth something. My money is trapped against my will in something I can't get unless I am fired. Wish I could pull the money even with all the taxes and fines. I'd have it in PMs. I would be ahead on that front if I had been allowed to do it when I wanted to. I am a hostage to inflation. 

I wonder how purchasing gold and silver factors into these numbers? 

Thu, 10/27/2011 - 09:34 | 1816889 gaoptimize
gaoptimize's picture

My bosses are good people, and worried.  I told them exactly this yesterday.

Thu, 10/27/2011 - 09:34 | 1816895 catacl1sm
catacl1sm's picture

Cashing in whatever they can they can to buy survival supplies.

Thu, 10/27/2011 - 08:59 | 1816755 firstdivision
firstdivision's picture

That was all me.  I bought a new TV and a few new shirts.

Thu, 10/27/2011 - 09:01 | 1816767 Archimedes
Archimedes's picture

Hey I helped! I bought a sweet 1968 Gibson 175D and a Larravee Cutaway from a Guitar auction!

Thu, 10/27/2011 - 10:13 | 1817061 Panic Panic Panic
Panic Panic Panic's picture

I bought Spam. And tinfoil, for a dapper new hat. 

Thu, 10/27/2011 - 10:23 | 1817087 FEDbuster
FEDbuster's picture

Think about Kevlar instead of tinfoil for that hat.

Price of 50lb bags of rice just went up 10% at Sam's Club. 

Thu, 10/27/2011 - 09:00 | 1816759 Tsar Pointless
Tsar Pointless's picture

So the price index was 2.5%, and GDP "growth" was the same 2.5%.

Am I correct that this makes GDP a wash? I mean, doesn't the first number get subtracted from the second number?

It really IS all inflation-related "growth".

Am I wrong? Did I truly pick the wrong morning to quit drinking?

Thu, 10/27/2011 - 09:00 | 1816760 MsCreant
MsCreant's picture

I wonder about storm damage and such. I say this because I am stimulating the hell out of my local economy by building a newer better house than the one I had destroyed by a tornado in April. There were lots of tornadoes this spring. And floods. I have never spent this kind of money before in my life! There must be a lot like me out there.

Krugman would be pleased.

Thu, 10/27/2011 - 09:05 | 1816776 ArkansasAngie
ArkansasAngie's picture

No doubt.

Although we still have Missouri boys working down here from up by Joplin.  They pay the gas to come.

Who'da thunk that Arkansas would be a job market.

Thu, 10/27/2011 - 09:23 | 1816845 MsCreant
MsCreant's picture

The "work" to settle my claim is ongoing. I am still dealing with the insurance adjustors and various support services, never mind the construction, or replacing the contents of the house. I underinsured by accident (I insured for what the house was worth on the market, not what I needed to replace it, really differnt number, I was short by 50,000), but even still, the insurance has been a great thing. My family is the source of a whole lot of employment right now (not to mention all the renting we are doing while the house is built, another kind of stim, they were unable to sell this house, so we are a generous income stream for them while they decide what to do next). 

The question would be, has there been more storm damage than normal?

The gov is always willing to blame the weather for bad numbers...

Thu, 10/27/2011 - 09:37 | 1816904 catacl1sm
catacl1sm's picture

Cashing in on isurance simply moves productive capital to unproductive activities... such as rebuilding your house. Not that your house shouldn't be rebuilt, but that the rebuilding, in and of itself, is not a productive activitey in that it simply brings us back to par, instead of moving forward.

Thu, 10/27/2011 - 09:50 | 1816957 MsCreant
MsCreant's picture

Agreed. I am not Krugman, advocating broken windows or alien invasions. It is not sustainable nor real growth. I do wonder if there are enough storm folks spending insurance money out there to explain the rise in GDP.

Your point is something we do not keep in mind nearly enough and is the source of a great deal of misunderstanding and dishonesty. 

Thu, 10/27/2011 - 09:01 | 1816765 LongSoupLine
LongSoupLine's picture

Less fear means lower MRE demand and prices...hence BTFMRED.

Thu, 10/27/2011 - 09:05 | 1816768 ArkansasAngie
ArkansasAngie's picture

You know ... I bet that if "they" could, they'd not have to publish any revisions.

Gee ... these guys are good at pretending

Thu, 10/27/2011 - 09:03 | 1816772 lizzy36
lizzy36's picture

Awesome so we don't need QE3?

I mean everything is fixed.

I am sure my pony will be arriving this weekend.

Thu, 10/27/2011 - 09:06 | 1816783 LongSoupLine
LongSoupLine's picture

Jobless claims revised up (shock!) This week's are 400k+...again.

Yet GDP is 2.5%...with 70+% of said GDP being....the consumer.

Yeah...2.5% isn't fudged...sure.

Thu, 10/27/2011 - 09:23 | 1816787 Everybodys All ...
Everybodys All American's picture

My question to anyone is ... What actually do they consider domestic in these numbers and might that be why we feel so bifurcated in this economy. If the growth from these companies is from business overseas and then reported back here what real good is it to our people and economy. I'm getting the funny feeling that much of this growth is not really domestic.

Thu, 10/27/2011 - 09:08 | 1816791 papaswamp
papaswamp's picture

"Real disposable personal income decreased 1.7 percent, in contrast to an increase of 0.6 percent."
"The personal saving rate -- saving as a percentage of disposable personal income -- was 4.1 percent in the third quarter, compared with 5.1 percent in the second."

Savings rate continues to decline as more live pay check to paycheck. This can only go on for so long before we again begin to see defaults rise as costs drain what is left.

Thu, 10/27/2011 - 09:09 | 1816795 JPM Hater001
JPM Hater001's picture

Isn't this all just under-reported inflation and over-reported GDP via BLS b as in B and s as in S...BS?

Thu, 10/27/2011 - 09:11 | 1816801 spartan117
spartan117's picture

USDX getting raped.

Thu, 10/27/2011 - 09:13 | 1816814 Flakmeister
Flakmeister's picture

So GDP is growing at 2.5% and the 10 year is at ~2.2%..... 

Cog Dis would be so proud...

Thu, 10/27/2011 - 09:16 | 1816826 Iriestx
Iriestx's picture

I spent $7500 on weapons and ammo last quarter.  I'm driving the GDP.

Thu, 10/27/2011 - 09:16 | 1816829 papaswamp
papaswamp's picture

$447 Billion in new debt to generate $185 Billion in GDP growth.....yea that is positive.

Thu, 10/27/2011 - 09:19 | 1816836 trillion_dollar...
trillion_dollar_deficit's picture

This number is completely meaningless when were running $1.3 trillion deficits. Get back to me when that deficit number is cut by 2/3 and we still have 2.5% growth.

Thu, 10/27/2011 - 09:24 | 1816847 dvsteenk
dvsteenk's picture

but the rally is absolutely justified (bloomberg said so!)

gosh, they are pumping the shit out of it here in Europe before US opens... S&P might cross 1300 today, incredible as it may be

Thu, 10/27/2011 - 09:27 | 1816857 machineh
machineh's picture

Note that while the GDP deflator slowed by 1.3% from 2Q to 3Q, CPI-U accelerated from 1.5% (3 months ending June) to 4.4% (3 months ending September).

One of these agencies is way off the mark.

Thu, 10/27/2011 - 09:29 | 1816867 Contra_Man
Contra_Man's picture

  "Where this spending power came from, we would be delighted to know."

 

Answer:  Consumer spending came from suspended mortgage payments (default) for which the Banksters' are not marking any defaults to market.  

Kicking the oil drum down the inflation highway IMHO.

Thu, 10/27/2011 - 09:30 | 1816872 Roland99
Roland99's picture

It wasn't people signing up for Netflix.

 

Must be all those Groupon orders.

 

 

Thu, 10/27/2011 - 09:36 | 1816900 John Law Lives
John Law Lives's picture

No mention of the 402K weekly jobless claims reported in the US this morning?

The core issue of the Euro debt crisis is the lack of good job creation (coupled with massive deficit spending) over a number of years.  I would love to know exactly how many private sector jobs are expected to be created by this bailout package + austerity program.  Maybe the answer is that more jobs will be slashed than created.  

100% FUBAR.

Thu, 10/27/2011 - 09:41 | 1816922 Truffle_Shuffle
Truffle_Shuffle's picture

Umhum......more typical GDP bullshit!

Must be the estimated 4 million preppers stocking up on beans, bullets and band-aids driving such "growth".  

Don't forget.....we WILL continue this non-linear growth to infinity and beyond.  Natural laws be damned. 

Thu, 10/27/2011 - 09:45 | 1816935 spastic_colon
spastic_colon's picture

....it will show up in the line item "gas stations".........but of course for now, the headline is all that counts......Bernank wanted to inflate our way out and the Fed has succeeded

Thu, 10/27/2011 - 09:51 | 1816958 John Law Lives
John Law Lives's picture

Bernank has not inflated our way out.  Bernank has delayed the day of reckoning.

The Euro bailout does not create the millions of good jobs needed to really solve the underlying issues in the EU.  The Fed's actions are also not leading to the creation of millions of good jobs needed in the US.

 

Thu, 10/27/2011 - 09:52 | 1816970 lolmao500
lolmao500's picture

In other news :

http://www.dailymail.co.uk/news/article-2053502/Occupy-Oakland-protests-...

US Marine in critical condition after OccupyOakland

A U.S. Marine veteran is today in a critical condition in hospital after being injured by a police gas canister during last night's Occupy Oakland protests, which saw running battles break out between authorities and protesters as a crowd tried to reclaim an encampment.
Scott Olsen, 24, of Daly City, California, an Iraq veteran and member of Veterans for Peace, suffered a skull fracture and brain swelling after being hit in the head during the riots.

Thu, 10/27/2011 - 10:06 | 1817019 MFL8240
MFL8240's picture

The US financial data is so riddled with fraud its impossible to know what to believe.  However, the stores are empty, people are not working, homes are not being built or sold but I guess all is well because how else could the US stock market be up to 12100, just shy of its all time high.  Frankly, I dont believe much of anything and think these bastards running the US are the most sickening group ever in American history.  Yep, I am talking about Obama and his group of liars and cheats and the banking cabal, unable to tell the truth about anything.  Fraud is the name, reelection is the game!  

Thu, 10/27/2011 - 10:09 | 1817033 overmedicatedun...
overmedicatedundersexed's picture

oakland is run by republicans for over 30 yrs..look at the police state they run there.....oops I got it backward..

sorry..compassionate democrats know how to kill a protest.

Thu, 10/27/2011 - 12:17 | 1817538 Saro
Saro's picture

Of course consumers are spending.

Ammo and spam purchases are bullish, right?

Thu, 10/27/2011 - 18:24 | 1818912 ejmoosa
ejmoosa's picture

I am pretty sure I am not an idiot.  So when I do the math, the increase from second to third quarter is 1.23%, not the 2.5%. 

 

Second Quarter 2011 $15,012.8 

Thid Quarter 2011     $15,198.6

Increase from second to third quarter 1.23%

 

For a 2.5% increase in GDP, the GDP number would need to be $15,388.12 

 

 

Sat, 10/29/2011 - 11:16 | 1824172 insidious
insidious's picture

Is US GDP really growing? What portion of the US deficit spending contributes to GDP? I believe government transfer payments aren't directly counted in GDP BUT my understanding is that the money goes to folks who typically spend the money right away (thus the deficit spending related to transfer payments does in fact add to GDP as well as most other spending done by government).

If we suddenly balanced the Federal budget and removed a trillion + of borrowed money from government spending how would that affect GDP (assuming no knock on effects from the deficit spending)? I'm guessing GDP would be flat to negative. More feel good magic brought to you by borrowing.

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