EmailGDP in the third quarter was revised down from 2.5% in the advance release to 2.0% in the second estimate. That is still up from 1.3% in the second quarter. The Briefing.com consensus expected GDP to remain at 2.5%.
Real final sales, which exclude inventories, remained at 3.6%. That means that the entire negative revision to GDP was due to discrepancies in inventory flows.
As we noted in our preview, the BEA overestimated inventories in September by substantial amounts. This included an estimated 0.9% increase in merchant wholesaler inventories in September when they actually declined 0.1%.
Using the latest inventory data, inventories actually declined by $8.5 bln. That was a marked departure from the $5.4 bln gain in the advance estimate. The revisions subtracted an additional 0.48 percentage points from the advance estimate.
Personal consumption and fixed investment were also revised down, but the revisions were modest. Consumption increased 2.3% in the third quarter, down from 2.4%. Fixed investment increased 12.3%, down from 13.7%.
The declines in consumption and fixed investment, however, were completely offset by stronger net export levels. The net export deficit was revised down, from -$409.4 bln to -$400.7 bln. This added an additional 0.27 percentage points to GDP. Government spending was essentially unchanged in the second estimate.
