The Commerce Department is out with its first revision on third-quarter gross domestic product. GDP growth was initially said to be 2.0%, up from 1.3% in the second quarter. Final demand was what offered the boost. The revised figure was adjusted higher as expected to a new rate of 2.7%. The issue is that the revision was not quite as much as expected, as Dow Jones and Bloomberg were both calling for 2.8%.
Stronger inventories and exports added the boost along with final demand from consumers. If you look at corporate profits in the measurement, this rose by over 18% if you adjust for after-taxes and for inventories and capital consumption. The change in private inventories added 0.77 of a percentage point to growth. Exports were revised to +1.1% from -1.6%. Business spending was negative. The PCE Price Index rose by 1.6% in the quarter.
With unemployment still close to 8.0%, today’s GDP gains may feel a bit empty, even if this was the best GDP gain since late 2009. Again, this is a revision number.
JON C. OGG
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