Apparently the retail sales news didn’t impress the caretakers of the GDP-predicting model at the Atlanta branch of the Federal Reserve, which has just cut its 3Q16 GDP prediction to an annualized 1.9 percent — half of what it was forecasting in early August.
Neither outfit cited today’s August Manufacturing and Trade Inventories and Sales report from the Census Bureau. Inventories went up a seasonally adjusted 0.2 percent, as did sales. August sales were the same as a year ago, while inventories came in 0.8 percent higher. So a large portion of the past year’s pitiful GDP growth occurred because inventories have been built up, not because people have actually bought more stuff.
UPDATE: From Bloomberg:
Consumer confidence unexpectedly fell to a one-year low in October as Americans soured on the outlook for the economy amid a contentious presidential election campaign.
The University of Michigan preliminary index of sentiment declined to 87.9 from 91.2 in September, according to a report Friday. …
A sustained acceleration in worker pay has remained elusive even as companies keep adding jobs at a solid pace …”
Worker pay not going up much? How can that be? Mark Zandi tells us every month on the ADP conference call that wages are rising. (/sarcasm)