In a bit of a surprise this morning, the Bureau of Economic Analysis (BEA) reported that the third and final revision of 3rd quarter 2010 GDP came in a +2.6%, which was noticeably less than the +2.8% the consensus had been expecting. The +2.6% revision is a miniscule +0.1% improvement over the +2.5% earlier estimate. It is important to note that although a positive +2.6% growth rate in the economy is welcome, +2.6% is not sufficiently large enough to put a noticeable dent in the unemployment rate, currently at 9.8%.
BEA also reported that Personal Consumption rose at a revised +2.4% in the 3rd quarter, down -0.5% from the earlier +2.8% estimate. Most analysts had been anticipating an improving level of consumer consumption and this was the primary reason for the belief the economy was finally gaining traction. In addition, 3rd quarter core PCE (personal consumption expenditures excluding food and energy) prices increased only +0.5% at an annual rate. This is well below the early estimate of 0.8% and is the lowest quarterly core PCE reading in 50+ years. It appears inflation is virtually nonexistent.
Regards -Keith Springer