GDP comes in as expected at +2.8%. Consumption revised lower. Government up. Net Trade a negative and Investment also subtracts in the revision.
The revision to the GDP came in at +2.8% from +3.5% originally reported.
Personal Consumption on an annualized basis fell to 2.9% from 3.4%. The expectation was for a decline to 3.2%. This contributed 2.07% to the 2.8% total gains. Private investment contributed 0.91% (vs prior estimate of 1.22%). The Net Exports subtracted -0.83% which originally showed a decline of -0.53 and Government contributed 0.63% of the 2.8% gain. In the initial report, this sector added 0.48%.
The Change in Inventories (which is a part of investment) contributed 0.87% to the overall +0.91% from total private investment. It is expected that inventory replenishment will help growth going forward in the 4th quarter. Motor Vehicle purchases was responsible for 0.81% growth in the 3rd quarter. The cash for clunker program was a help to this in the 3rd quarter. Governement is doing their part.
One would think that with a lower dollar the Net Export contribution would be a positive for growth (or at least less of a negative as the US does continue to run a deficit from trade). However, the decline is indicative of the reliance on foreign goods and in particular the reliance on oil imports. Imports alone contributed -2.53% to GDP while exports added 1.71%. Until that time when reliance on oil is decreased (or demand falls), the US will continue to have net trade issues and this will continue to be a negative for growth.
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