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Q3 GDP final rises to 3.1% (With Caveats)
Hotair ^ | 12/20/2012 | Ed Morrissey

Posted on 12/20/2012 7:10:58 AM PST by SeekAndFind

The BEA released the third and final estimate of US economic growth in the third quarter, and it turned out better than either of the first two reports for Q3. Growth had been initially estimated at 2.0% in the October advance estimate and rose to 2.7% in November’s interim report, but the final number rose even further to 3.1%:

Real gross domestic product (GDP) increased 3.1 percent in the third quarter of 2012 after increasing 1.3 percent in the second quarter, according to estimates released by the Bureau of Economic Analysis. The third-quarter growth rate was revised up 0.4 percentage point from the second estimate released in November.

Don’t get too excited. Much of the increase came in inventory expansion and government spending, although consumer spending also picked up a little more than first thought:

Inventory investment was the main driver of the third-quarter acceleration in real economic growth. Nonfarm inventory investment turned up, more than offsetting a larger decline in farm inventory investment that stemmed from the summer drought in the Midwest.

In addition, consumer spending for durable goods picked up, as motor vehicles and parts turned up. Federal national defense spending rebounded, as did state and local government spending.

The real final sales of domestic product for Q3, which strips out inventory expansion, was a bit better than Q2 but not all that much better:

Real final sales of domestic product — GDP less change in private inventories — increased 2.4 percent in the third quarter, compared with an increase of 1.7 percent in the second.

In other words, we did see real improvement in economic growth over Q2, which the initial estimates understated. However, the increase from 1.3% rate in Q2 to a 3.1% rate in Q3 is a bit misleading, especially when considering the big increase in government spending over the previous quarter, as I pointed out a month ago:

Real federal government consumption expenditures and gross investment increased 9.5 percent in the third quarter, in contrast to a decrease of 0.2 percent in the second. National defense increased 12.9 percent, in contrast to a decrease of 0.2 percent. Nondefense increased 3.0 percent, in contrast to a decrease of 0.4 percent. Real state and local government consumption expenditures and gross investment increased 0.3 percent, in contrast to a decrease of 1.0 percent.

Even CNBC seems rather tempered in its assessment, although you have to travel rather far into the article to notice:

While growth in consumer spending, which accounts for about 70 percent of U.S. economic activity, was raised by 0.2 percentage point to a 1.6 percent rate, that mostly reflected higher health care costs.

Business inventories were trimmed to $60.3 billion from $61.3 billion. Restocking by businesses contributed 0.73 percentage point to GDP growth.

Given the sluggish spending pace, some of the inventory accumulation might have been unplanned, suggesting businesses will need to liquidate stocks this quarter because of weak demand.

Meanwhile, weekly jobless claims increased, but still remained in the same range as we’ve seen for the last 20 months:

A separate report showed weekly jobless claims rose slightly more than expected. Weekly jobless claims rose to 361,000 in the latest week. Claims has been expected to rise to 357,000, from 343,000 the prior week.

That could change, too, if this report on the Christmas retail season turns out to be accurate:

To be sure, stores have been offering discounts throughout the season, but they resisted the blockbuster deals that ate away at profits last year. In fact, promotions and discounting were down 5 percent through Dec. 10 compared with last year, according to BMO Capital Markets, which tracks promotions at about two-thirds of mall stores. But sales have been slow, and as of Monday, the level of discounting is now even with a year ago.

Now, stores will have to rely even more on the final days before Christmas to make up the sales shortfall. ShopperTrak, which counts foot traffic and its own proprietary sales numbers from 40,000 retail outlets across the country, said Wednesday that the number of shoppers in stores for the week that ended on Saturday fell 4.4 percent from the year-ago period, while sales declined 4.3 percent. As a result, the company said it would slash its sales forecast to a 2.5 percent increase to $257.7 billion, down from the 3.3 percent growth it had initially predicted.

And online sales, which have been seen as a beacon during the season, have been below expectations, too. Online sales are up 13 percent to $35 billion from Nov. 1 through Dec. 16, according to comScore, an online research. That pace is below the forecast of 17 percent for the season.

“It feels like the steam is out of the holiday since Black Friday,” said Bill Martin, ShopperTrak’s co-founder.

Rising inventories and falling sales do not make for a bright economic future.

TOPICS: Business/Economy; Culture/Society; Government

1 posted on 12/20/2012 7:11:06 AM PST by SeekAndFind
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To: SeekAndFind

The improvement in GDP that went unreported in real time could help explain Obama’s re-election.

2 posted on 12/20/2012 7:15:17 AM PST by Redmen4ever
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To: SeekAndFind

When you take out government spending... we shrunk. Liars figure and figures lie.


3 posted on 12/20/2012 7:15:47 AM PST by LibLieSlayer (A child is born in Bethlehem KING of KINGS)
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To: Redmen4ever

This report is laughable. We are in a depression and it is going to get much worse.

The reason obama won:

1) romney
2) reince preibus
3) karl rove
4) us media
5) other people’s seized property being redistributed
6) school indoctrination by the left and low information voters


4 posted on 12/20/2012 7:19:50 AM PST by LibLieSlayer (A child is born in Bethlehem KING of KINGS)
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To: LibLieSlayer
Slight change, but mainly in emphasis:

1) The media
2) The democrat-media/Hollywood/academic complex (includes school indoctrination)
3. Other people's seized property being redistributed (the 47% and low information voters)
4. GOP consultants
5. Gope
6. Romney

And for good measure, perhaps the most important one:
7. Us. (meaning conservatives)

5 posted on 12/20/2012 7:34:48 AM PST by Lakeshark (!)
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To: LibLieSlayer
7) Baraka Claus...

6 posted on 12/20/2012 7:35:46 AM PST by COBOL2Java (kak-is-toc-ra-cy: Government by the least qualified or most unprincipled citizens. See: GOP-e)
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To: Lakeshark

Some of “us” may be at fault but I did everything that I could do to defeat the communist fudge packer.


7 posted on 12/20/2012 7:57:40 AM PST by LibLieSlayer (A child is born in Bethlehem KING of KINGS)
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To: COBOL2Java

Comrade baracka claus

8 posted on 12/20/2012 7:59:33 AM PST by LibLieSlayer (A child is born in Bethlehem KING of KINGS)
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To: LibLieSlayer

When you use honest inflation figures, we never entered a recovery at all.

9 posted on 12/20/2012 8:37:27 AM PST by 9YearLurker
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To: LibLieSlayer
A few things to ponder (I am as guilty of all of these at one time or another as anyone):

1. Circular firing squad mentality during the primaries
2. Let's take out everyone who isn't perfect mentality.
3. If our preferred candidate doesn't win, we're just going to be obstinate mentality.
4. If a RINO wins, it isn't our fault mentality.
5. It's the GOPe's fault if a RINO wins, not ours mentality
6. If a RINO wins (insert candidate, but especially if it's Romney) we're taking our ball and going home mentality
7. Romney's rich, we don't need to donate more mentality.
8. Romney's _________(could be filled in with a dozen attributes) , therefore I don't need to help, fight, knock on doors, register voters, attack the democrats publicly, persuade more independents how bad the dems are, etc., etc.
9. Underestimating the power of the democrat/media complex, the power of the Chicago way, and the depth to which our culture has descended.

20/20 hindsight on my part, but it's why we lost, along with the other six points on the list, especially the first three.

10 posted on 12/20/2012 8:44:12 AM PST by Lakeshark (!)
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To: 9YearLurker

100% dead on!


11 posted on 12/20/2012 9:02:07 AM PST by LibLieSlayer (A child is born in Bethlehem KING of KINGS)
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To: Lakeshark
1) The republicans have not offered us a true Republican since Reagan... one that actually understood Republicanism and believed in it. That is the problem at its core.


12 posted on 12/20/2012 9:04:35 AM PST by LibLieSlayer (A child is born in Bethlehem KING of KINGS)
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To: LibLieSlayer

Problem: There has not been a conservative as capable as Reagan since he left the presidency. As conservatives we have not been able to find someone to run who can win that can approximate him. As conservatives we haven't affected the culture in a way that can elect a strong conservative. As conservatives we haven't been able to defend even one of our candidates from the democrat/media complex slanders. Palin, Newt, Santorum, Perry, you name the conservative and we have not been able to get them the nomination nor protect them from the leftist destroyers, heck we can't even protect them from those in our own ranks.

13 posted on 12/20/2012 11:47:33 AM PST by Lakeshark (!)
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To: Lakeshark
That is because the republican leadership is no different from the dim leadership... the collude and conspire together and they have blocked us at every attempt... rigged primary elections... stolen caucuses... SoS keeping leading candidates off ballots in several key states... and by attacking our candidates and smearing them like the dims do us... that is why “we” have not been successful. We need a war plan to destroy the liberal ranks of the gop or vacate and start over. There is no hope with the current makeup in DC... they are the ones that brought us to this terrible point in our History. We have a president today that our Founders would have hung in their day.


14 posted on 12/21/2012 5:25:19 AM PST by LibLieSlayer (A child is born in Bethlehem KING of KINGS)
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