As we highlighted earlier, while inventories and exports were significant contributors to today's 2.9% GDP print, adding 0.61% and 1.17% to the bottom line respectively, or more than half of the total 2.9% number...
....the core component of US economic growth, personal consumption which is traditionally responsible for ~70% of GDP, was a notable disappointment, predictably sliding by half from its Q2 outlier print.
Likewise, fixed investment also known as capital spending, continued its recessionary ways, subtracting from growth for the 4th consecutive quarter, something never seen outside of a recession.
But digging deeper into the numbers reveals something even more fascinating, alarming and/or amusing.
As the following chart shows, the spike in exports - which curiously came a time of a stronger dollar - was the highest seen in over two years, and amounted to $49 billion in chainged dollars, or roughly 41% of the nominal $119 billion annualized increase in Q3 GDP.
Where it gets even more surprising is looking into just what the exported commodity was. The answer: soybeans.
As Standard Life economist Jeremy Lawson points out, "In a normal year, US soybean exports increase strongly in the winter months after the fall harvest. The Census Bureau then smooths these spikes out through its seasonal adjustment process. This summer, however, soybean exports from South America (Argentina and Brazil are by far the world's largest exporters) have been very weak thanks to a poor harvest, leaving US producers to fill the gap.
"The application of the normal seasonal factors to the unusually large increase in soybean exports has meant that seasonally adjusted food, feed and beverage exports are up 121% in three-month-on-three-month (3m/3m) annualized terms."
A chart of food exports is shown below.
And for a little more context as to the sustainability of this surge.
So according to the US government Bureau of Economic Analysis, in the quarter, goods exports amounted to $41 billion of the $119 billion chained dollar increase, while Soybeans accounted for some $38 billion of this number.
Or, said otherwise, soybean exports were responsible for just under a third, or 0.9% of "growth" in the world's biggest economy. Which is bad news: as Capital Economics' Ian Shepherdson said, “The soybean boost is indeed a one-time thing. It has no implications for trend growth and likely will reverse over the next couple quarters."
So doing some more back of the envelope calculations, if one excludes soybean exports, the inventory build, and the contribution from Obamacare which amounted to another 10% of the bottom line, the US economy grew by 0.9% annualized in the third quarter, 2% below the reported number.
Of course, that's not what newspapers will blast on their front pages tomorrow, instead cheering the best economic "growth" in over two years, just in time for the elections.