Q3 GDP Of 3.5% Beats Expectations As Inventories Soar; Trade, Investment Tumble

[McRocket]

'With the US economy firing on all four cylinders heading into the 3rd quarter, largely thanks to the latent effects from Trump's fiscal stimulus, moments ago the BEA reported that in its first estimate of Q3 GDP, the US economy continued to surprise to the upside, growing at an annualized rate of 3.5%, modestly below the second quarter's 4.2% print but above the 3.3% expected.

However, a quick look at the internals reveals some ugly details below the surface.

While Personal consumption was indeed strong, rising 4.0% in Q3 after 3.8% in Q2, the largest increase since Q4 2014, and contributing 2.69% of the bottom line 3.49% GDP print, the main reason why the US economy grew as fast as it did in the third quarter was a build up in inventories, which contributed 2.07%, or 59% of the bottom line number. This was the biggest quarterly inventory stocking since the first quarter of 2015.

All the other components of GDP were ugly, with nonresidential fixed investment, or spending on equipment, structures and intellectual property collapsing to just 0.8% in 3Q after rising a blistering 8.7% in the prior quarter. Commenting on this drop, CIBC economist Royce Mendes noes that "business fixed investment showed up only flat on the quarter, possibly a sign that the most potent effects of the tax cuts are now in the rearview mirror."

Here is a breakdown of the less than stellar components:

• Fixed Investment subtracted -0.04% from the bottom line number
• Exports subtracted -0.45% from the bottom line number
• Imports subtracted -1.34% from the bottom line number

In other words, between CapEx and Net Trade, the US economy actually contracted by over 1.83%.

Q3 GDP Of 3.5% Beats Expectations As Inventories Soar; Trade, Investment Tumble


ALWAYS look past the headlines.


BTW - this brings the average GDP growth under Trump's Presidency (by my calculations) to 2.82%

 

[CrusaderFrank]

What a fucking moron

 

[Manonthestreet]

WASHINGTON (AP) — The nerve-wracking anxiety that's gripped the U.S. stock market seems oddly unmoored from economic reality: Despite the turbulence on Wall Street, economic growth is strong, unemployment ultra-low and consumers exceptionally confident. Wall St. disconnect: Traders panicky despite robust economy

 

[CrusaderFrank]

Grow the economy by not selling stuff! Brilliant!!

 

[CrusaderFrank]

WASHINGTON (AP) — The nerve-wracking anxiety that's gripped the U.S. stock market seems oddly unmoored from economic reality: Despite the turbulence on Wall Street, economic growth is strong, unemployment ultra-low and consumers exceptionally confident.

That's what Krugman and his illiterate followers call "Armageddon"

 

[McRocket]

WASHINGTON (AP) — The nerve-wracking anxiety that's gripped the U.S. stock market seems oddly unmoored from economic reality: Despite the turbulence on Wall Street, economic growth is strong, unemployment ultra-low and consumers exceptionally confident.

Obviously you either did not read or did not understand the OP. The GDP numbers are NOT strong as 59% of the number is based solely on the largest inventory build since 2015.
And if you take out CapEx and NEt trade - the economy actually CONTRACTED by 1.83%.

Also, Trump himself (rightly) called the U-3 a 'hoax'...so it means nothing.

Donald Trump Calls Unemployment Rate One of the "Biggest Hoaxes in Politics"

Finally, Consumer Confidence has been rising steadily since the end of the Great Recession...that rise has not accelerated under Trump.

United States Consumer Sentiment | 1952-2018 | Data | Chart | Calendar


And let's not forget the huge debt burden Trump is creating.

Trump's Debt

And the DOW is down YTD - and it is almost Halloween!?!

 

[Crepitus]

'With the US economy firing on all four cylinders heading into the 3rd quarter, largely thanks to the latent effects from Trump's fiscal stimulus, moments ago the BEA reported that in its first estimate of Q3 GDP, the US economy continued to surprise to the upside, growing at an annualized rate of 3.5%, modestly below the second quarter's 4.2% print but above the 3.3% expected.

However, a quick look at the internals reveals some ugly details below the surface.

While Personal consumption was indeed strong, rising 4.0% in Q3 after 3.8% in Q2, the largest increase since Q4 2014, and contributing 2.69% of the bottom line 3.49% GDP print, the main reason why the US economy grew as fast as it did in the third quarter was a build up in inventories, which contributed 2.07%, or 59% of the bottom line number. This was the biggest quarterly inventory stocking since the first quarter of 2015.

All the other components of GDP were ugly, with nonresidential fixed investment, or spending on equipment, structures and intellectual property collapsing to just 0.8% in 3Q after rising a blistering 8.7% in the prior quarter. Commenting on this drop, CIBC economist Royce Mendes noes that "business fixed investment showed up only flat on the quarter, possibly a sign that the most potent effects of the tax cuts are now in the rearview mirror."

Here is a breakdown of the less than stellar components:

• Fixed Investment subtracted -0.04% from the bottom line number
• Exports subtracted -0.45% from the bottom line number
• Imports subtracted -1.34% from the bottom line number

In other words, between CapEx and Net Trade, the US economy actually contracted by over 1.83%.

Q3 GDP Of 3.5% Beats Expectations As Inventories Soar; Trade, Investment Tumble


ALWAYS look past the headlines.


BTW - this brings the average GDP growth under Trump's Presidency (by my calculations) to 2.82%

Stocking up ahead of tariffs gave it a boost.

 

[NightFox]

Some other factors to consider ...

- The rate differentials between the U.S. and other economies is causing a rapid appreciation of the dollar which is a significant drag on exports.
- The Trump Tariff regime likely drove increased imports (and inventory buildup) in anticipation of implementation.
- The Federal Reserve is sticking to its story regarding being a "long ways away from neutral policy" and signaling another hike this year and several next year.

That along with these ill advised Trade Disputes and the uncertainty in Italy are likely a large contributing factor to the decline in fixed investment as business become less certain of future conditions.

All in all 3.5% GDP growth for Q3 along with low inflation (1.6%) is encouraging, IF we can get these trade disputes resolved in short order, the Fed focuses on the data and not some arbitrary target and we don't experience any liquidity problems, it's conceivable that 2019 could be a pretty healthy year from an economic standpoint.

Of course, it's hard to predict what this Administration will do next, so it seems the best bet is to hope for the best and prepare for the worst.

"May you live in interesting times"

 

[Manonthestreet]

WASHINGTON (AP) — The nerve-wracking anxiety that's gripped the U.S. stock market seems oddly unmoored from economic reality: Despite the turbulence on Wall Street, economic growth is strong, unemployment ultra-low and consumers exceptionally confident.

Obviously you either did not read or did not understand the OP. The GDP numbers are NOT strong as 59% of the number is based solely on the largest inventory build since 2015.
And if you take out CapEx and NEt trade - the economy actually CONTRACTED by 1.83%.

Also, Trump himself (rightly) called the U-3 a 'hoax'...so it means nothing.

Donald Trump Calls Unemployment Rate One of the "Biggest Hoaxes in Politics"

Finally, Consumer Confidence has been rising steadily since the end of the Great Recession...that rise has not accelerated under Trump.

United States Consumer Sentiment | 1952-2018 | Data | Chart | Calendar


And let's not forget the huge debt burden Trump is creating.

Trump's Debt

And the DOW is down YTD - and it is almost Halloween!?!

Who didn't read?.....llmmaao

 

[S.J.]

Pretty sad when an American leaps for joy at the thought of our economy failing.

 

[McRocket]

WASHINGTON (AP) — The nerve-wracking anxiety that's gripped the U.S. stock market seems oddly unmoored from economic reality: Despite the turbulence on Wall Street, economic growth is strong, unemployment ultra-low and consumers exceptionally confident.

Obviously you either did not read or did not understand the OP. The GDP numbers are NOT strong as 59% of the number is based solely on the largest inventory build since 2015.
And if you take out CapEx and NEt trade - the economy actually CONTRACTED by 1.83%.

Also, Trump himself (rightly) called the U-3 a 'hoax'...so it means nothing.

Donald Trump Calls Unemployment Rate One of the "Biggest Hoaxes in Politics"

Finally, Consumer Confidence has been rising steadily since the end of the Great Recession...that rise has not accelerated under Trump.

United States Consumer Sentiment | 1952-2018 | Data | Chart | Calendar


And let's not forget the huge debt burden Trump is creating.

Trump's Debt

And the DOW is down YTD - and it is almost Halloween!?!

Who didn't read?.....llmmaao

Okaaaaaaaay.

The answer is you either did not read it and/or understood it.

If you did - and understood macroeconomics - you would not have made the statement that you did.