Thanks to a much lower than expected price deflator, Real Q3 GDP beat estimates with a 2.6% increase vs the estimate of 2.4%. Looking at nominal growth, the estimate was 7.7% and we got 6.7%. Thus, if the price deflator came in as expected, the Real GDP print would have been 1.4%. Personal spending rose 1.4% q/o/q annualized, above the forecast of 1% but the 2nd quarter in the past 3 with a one handle. The main driver to growth was on the trade side as exports rose more than imports and this added 277 bps to GDP. Inventories were a drag of 70 bps and the drop in residential real estate took off 137 bps. Capital spending on equipment and IP added 90 bps. Spending on commercial structures was a drag of 40 bps. Government spending added 42 bps.
Bottom line, on a REAL basis, the US economy has flat lined this year. Entering the year chained GDP was $20.006 Trillion and we ended Q3 a hair above at $20.022 Trillion. Inflation though has the economy bigger nominally speaking as the nominal GDP figure ended Q3 at $25.66 Trillion vs $24.35 Trillion at the end of 2021. After this positive print for Q3, expect another negative GDP print in Q4.
Durable goods for September was also just released and I don’t know if it was included in the Q3 GDP data or Q3 GDP is going to be revised in response. I say this because durable goods were weaker than expected with the core rate down .7% m/o/m vs the estimate of up .3% and August was revised down by 6 tenths. Plugged into GDP was core shipments which was also light relative to expectations.
REAL GDP in $s
Initial jobless claims rose to 217k from 214k last week. That is 3k below the estimate. The 4 week average rose to 219k from 212k, a 6 week high. Of note, continuing claims jumped above 1.4mm at 1.44mm, about 50k more than expected and up from 1.38mm in the week before.
The bottom line with claims is still the same in that the pace of firing’s is still muted and it’s the rate of hiring that is the first to slow. Next week’s payroll forecast is 190k which would be the slowest since a negative print was seen in December 2020.
4 week avg in Initial Claims
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor. Each day The Boock Report provides summaries and commentary on the macro data and news that matter, with analysis of what it all means and how it fits together.