And just like that Q3 GDP, the one for the quarter ended Sept.30, was revised from 3.9% (which in turn was revised higher from 3.5%) to a mindblowing 5% - the highest print since Q3 2003 when GDP rose by 6.9%. This was above the highest Wall Street forecast of 4.7%, higher even than Joe Lavorgna's. The drivers: unprecedented revisions to Personal Consumption which supposedly rose by 3.2% in Q3 as opposed to the 2.2% prior reported, and 2.5% expected. Consumption accounted for 2.21% of the final 5.0% GDP print: this was the highest since Q4 2010 when it rose 2.8%. In fact, everything was revised higher: fixed investment rose 1.21% compared to the 0.97% reported previously; private inventories were virtually unchanged after allegedly subtracting 0.6% from growth in the original Q3 GDP estimate; net trade was unchanged adding 0.77% to GDP and finally the government boosted GDP a little as well, contributing 0.8%.
In other words, it is all downhill from here, as the subprime fueled boom in consumer spending in the late summer will certainly not be repeated any time soon, Q4 capex is crashing (as the durables report just confirmed), and inventory restocking took place far earlier than expected, meaning expectations of a low 2% pring for Q4 GDP will now have to be revised lower as consumption was pulled aggressively into the present.
GDP breakdown by component:
[4]
And a longer-term view of GDP:
[5]
After this report if there was any doubt if the trapped Fed will hike rates in April, it is now gone, unless of course, the market "crashes" by a whopping 5% between now and then and pull the Bullards out of the woodwork once again.
