Today, the Bureau of Economic Analysis (BEA) released their third and final installment of the Q3 2009 GDP report showing that the economy expanded with GDP increasing at an annual rate of 2.2% from Q2, a significantly slower rate than the 3.5% originally reported in October's fictitious preliminary release.It's important to recognize the extent to which these numbers had been ginned-up within the context of the typical release process and consider the fact that the future benchmark revisions will more than likely revise the result even lower.
As I had noted in my commentary on the advance release, it was extremely unlikely that Q3 fixed residential investment expanded to a rate surpassing all quarters of the ten years of preceding housing boom.
It was also extremely unlikely that Q3 non-residential fixed investment declined by the tepid 2.5% rate during the same quarter that saw the worst contraction in CRE prices in at least twenty years.
Finally, Q3 real personal consumption was clearly not experiencing organic growth but simply showing the temporary distortion of the "cash for clunkers" policy.
With today's release we are getting closer to witnessing the actual growth seen in Q3.
Residential fixed investment was revised down to show an increase 18.9% at an annual rate but likely still has further downward revisions to come in benchmark releases.
Non-residential fixed investment was revised to show a decline of -5.9% at an annual rate but again, will likely be revised to show a steeper contraction in future revisions.
Durable goods increased at an annual rate of 20.4% propped nearly entirely as the result of the government’s one time sham “Cash for Clunkers” program.
