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Q3 GDP Estimate Beats Expectations As Government “Consumption” Soars
Posted By yihan On October 26, 2012 @ 7:26 am In Money Watch | Comments Disabled
Zero Hedge 
October 26, 2012
Moments before this morning’s first look at the Q3 GDP print came out we tweeted the following:
GDP will not disappoint ahead of election
Sure enough, the preliminary look at Q3 GDP just came out and “beat” expectations of a 1.8% print, with a 2.0% reading (or just in line with stall speed, a number which previously has been indicative of recessions). So far so good, but as with every other pre-election economic data point out of the government, one has to look behind the headline to get the true picture. And the details are, as expected, ugly. Because of the 2.02% annualized increase in GDP, over one third, or 0.71% (compared to a deduction of -0.14% in Q2, and 0.64% of the 0.71% came from defense spending), was contributed by “Government Consumption.” This was the biggest rise in government spending in 3 years, and only the first contribution by Uncle Sam to its own GDP print since Q2 2010. So in much the same way as the September jobs print soared courtesy of government employee hiring, this same government is now juicing its own numbers to make itself look better. The real question is what the second and third Q3 GDP revisions will show, which both come, luckily, after the election. Recall that Q2 GDP initially came out at 1.5%, then was revised to 1.7%, until finally coming to rest at 1.25%.
And in other news, Personal Consumption: the key driver for real economic growth, rose 2.0% in Q3, missing expectations of a 2.1% increase.
Source: BEA 
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URLs in this post:
 Zero Hedge: http://www.zerohedge.com/news/2012-10-26/q3-gdp-estimate-beats-expectations-government-consumption-soars
 Image: https://twitter.com/zerohedge
 Image: http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/10/Q3%20GDP%202012.jpg
 BEA: http://www.bea.gov/newsreleases/national/gdp/2012/pdf/gdp3q12_adv.pdf
 Consumer Confidence Plunges To December 2011 Levels, Biggest Miss To Expectations In 7 Years: http://www.prisonplanet.com/consumer-confidence-plunges-to-december-2011-levels-biggest-miss-to-expectations-in-7-years.html
 Consumer Confidence Plunges To 39.8 From 45.4 On Expectations Of A Bump; Lowest Since March 2009: http://www.prisonplanet.com/consumer-confidence-plunges-to-39-8-from-45-4-on-expectations-of-a-bump-lowest-since-march-2009.html
 Another Unintended Consequence: $80 Billion ‘Gas Price’ Tax On Consumption: http://www.prisonplanet.com/another-unintended-consequence-80-billion-gas-price-tax-on-consumption.html
 Internet overtakes print in news consumption among Americans: http://www.prisonplanet.com/internet-overtakes-print-in-news-consumption-among-americans.html
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