Reclaiming Common Sense

Growing Domestic Product Continues 3.0% Annualized Rate

There are four main components to the Gross Domestic Product (GDP) Number(s:)

  • Personal Consumption Expenditures
  • Gross Private Domestic Investments
  • Imports/Exports, and
  • Government Expenditures

We are on pace for another record retail year. Total Retail Sales are up by over 4% through September. The "Retail Age" is at the mall - sales are expanding faster than inflation. Gross Private Domestic Investments include Residential and Non-Residential Investments. New Home Sales are up over last year. The Durable Goods Data was reported Wednesday as being up 2.1%. The Import Export Numbers were released Thursday Showing an increase in both imports and exports over last September.

The GDP preview article "Could Q3 Headline GDP Exceed 4%" detailed how the Annualized GDP Number could exceed last quarter's 3.1% and approach 4% or exceed it. The Real GDP number, same quarter growth was projected to be growing at 2.5% to 2.7% based on the strong MARTS Retail data and the Strong GPDI data.  So what was recorded and what was reported in the Advance Third Quarter GDP report?

The Annualized GDP rate was reported at a solid 3.0%. We saw Durable Goods up 8.3% from quarter to quarter. GPDI is up 6.0% quarter to quarter. Non-residential investment rose 3.9%. Equipment investments increased 8.6%. The head-scratcher here is that Residential Investments DECREASED by 6.0%. New home sales increased quarter to quarter. Personal Consumption Expenditures rose 2.4% with an increase in Goods purchased of 4.2%

Real GDP is up to 2.3% - Up for fifth straight quarter. Durable Goods increased by 6.2%. Non-Residential Investments increased by 4.4% while residential investments increased by 0.9%. This will be revised higher. Residential investment increased 2.4% 2014Q3, 11.2% 2015q3, and 2.6% 2016q3. We saw a larger than projected jump in new construction sales this month. We saw a solid number of residential structures under construction reported for October. GPDI will be revised higher.  Personal Consumption Expenditures increased 2.6%. Durable goods increased by 6.2%.

The GDP is a rear facing economic indicator. This report is the advance 3rd quarter GDP data. Next month we will receive the preliminary data. December we will receive the final GDP report for the third quarter. Disposable Personal Income is increasing. according to this GDP report. Savings is dropping. This report, as with other government reports, will be revised.