Skip to main content

by Mish

The acceleration in real GDP growth in the third quarter reflected an upturn in private inventory investment, an acceleration in exports, a smaller decrease in state and local government spending, and an upturn in federal government spending. These were partly offset by a smaller increase in PCE, and a larger increase in imports.

Exports surged 10%, imports 2.3%.

Real GDP

Doug Short at Advisor perspectives provides his usual fine display of charts in Q3 GDP Advance Estimate: A Surprisingly Strong 2.9%

The above chart shows the annualized% change from the preceding quarter in Real (inflation-adjusted) Gross Domestic Product and recessions as determined by the National Bureau of Economic Research (NBER). Also illustrated are the 3.22% average (arithmetic mean) and the 10-year moving average, currently at 1.39%.

Real GDP Historic Trend

Image placeholder title

Real Quarterly GDP Year-Over-Year Percent Change

Image placeholder title

A particularly telling representation of slowing growth in the US economy is the year-over-year rate of change. The average rate at the start of recessions is 3.35%. Ten of the eleven recessions over this timeframe have begun at a higher level of real YoY GDP.

Scroll to Continue


The above three charts courtesy of Doug Short and Advisor Perspectives.

GDP Estimates

  • GDPNow 3rd Quarter: 2.1%
  • FRBNY Nowcast 3rd Quarter: 2.2%
  • Markit 3rd Quarter: 1.0%
  • Econoday 3rd quarter consensus: 2.5%

It’s far too early to proclaim a winner. Revisions explain why.

Expect Revisions

Image placeholder title

The average revision from Advance to the Second estimate is 0.5 percentage points, in either direction.

Because of ongoing revisions, the average change from advance to the latest estimate is a whopping 1.1 percentage points, perhaps years or even a decade later.

For now, unless data weakens considerably between now and the December FOMC meeting, the Fed is going to get in a December rate hike.

Meanwhile, a surging US dollar is likely to dampen export growth for the 4th quarter.

Mike “Mish” Shedlock