The Bureau of Economic Analysis just released Q3’s second reading on GDP, and while growth was revised up to 2.1% as expected, the report was negative for final demand as consumption was revised lower (driven primarily by services). Weaker trade also offset the large upward revision to inventories, which were responsible for the entire improvement of growth versus the advance estimate. It’s worth pointing out that while inventories contributed the entirety of the improvement from one estimate to another, they were still a net drag on growth for the quarter, as their negative impact was revised to a less negative figure. Our annotated table summarizing the release is below.
The Q3 data is now between 2 and 5 months old; GDP is an extremely lagging indicator. That said, we can definitely get some reading on what’s ahead for Q4 based on these numbers. Expect the inventory drag to continue in the medium term, but keep in mind that neither private investment nor consumption trends appear to be weakening materially. All said, the combined impacts of stronger dollar, weaker industrial activity, and a collapse in energy capex have had a very mixed impact on the US economy, with respectable consumption figures basically offsetting those negatives so far this year.