December 5, 2013

3Q13 Gross Domestic Product, 2nd Reading: An Annualized 3.6%, Driven by Inventory Increases

Filed under: Economy,Taxes & Government — Tom @ 8:16 am

Expectations are for a 3.0 percent annual rate, up from 2.8 percent in early November’s initial estimate.

The report will be here at 8:30 a.m.


Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 3.6 percent in the third quarter of 2013 (that is, from the second quarter to the third quarter), according to the “second” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 2.5 percent.

The GDP estimate released today is based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, the increase in real GDP was 2.8 percent (see “Revisions” on page 3). With this second estimate for the third quarter, the increase in private inventory investment was larger than previously estimated.

The increase in real GDP in the third quarter primarily reflected positive contributions from private inventory investment, personal consumption expenditures (PCE), exports, nonresidential fixed investment, residential fixed investment, and state and local government spending that were partly offset by a negative contribution from federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The acceleration in real GDP growth in the third quarter primarily reflected an acceleration in private inventory investment, a deceleration in imports, and an acceleration in state and local government spending that were partly offset by decelerations in exports, in PCE, and in nonresidential fixed investment.

The increase is nice, if the inventories which were created get sold without deep discounting. The prospects for that don’t look good, based on early Christmas shopping season results.

More later.


UPDATE: Observations –

  • Personal consumption expenditures were revised down from 1.04 points of the GDP increase to 0.96.
  • Net exports fell from contributing 0.31 points to 0.07.
  • Inventory increases went from 0.83 points to 1.68 points — more than the 0.8-point net change in the GDP pickup.
  • Business equipment went from -0.21 points to 0.00.

You want to be happy that growth is a decent number for once, but the inventory element puts a huge damper on things.



  1. [...] to the GDP growth went from 0.83 percentage points in the first look to 1.68 percentage points. As Tom Blumer said, “The increase is nice, if the inventories which were created get sold without deep [...]

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