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Gross Domestic Product (GDP) Gross Domestic Income (GDI) from the BEA, chart by Mish.Chart Notes
Revisions to Third Quarter 2023 GDP
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GDP revisions from the BEA annotations by MishInstant GratificationThe discrepancy between GDP and GDI is ongoing and massive. That should bear attention. But it doesn’t and won’t.People like the instant gratification that comes with the initial release of GDP. GDI is only released in later revisions.All of the discussions today will be on the upward revision to GDP. But even among GDP watchers that’s not even the right focus.Real Final Sales is the bottom-line estimate of GDP. RFS is a very strong 3.7 percent but far less than the headline 5.2 percent that media will be crowing over.The Case for RecessionThe case for recession has not been dismissed. The negative 3.0 percent decline in GDI followed by very weak increases of 0.5 percent in two consecutive quarters does not rule out recession if one believes as I do, that GDI is the better set of numbers.At a minimum, as measured by GDI, the economy came very close to recession. Real Final Sales disagrees.GDP/GDI BlendThe GDP/GDI blend is a stab at the BEA saying they do not know which set of numbers is correct. However, the Philadelphia Fed makes a strong case that GDI numbers are more believable.The Philadelphia Fed does an alternate blend of GDP and GDI that they label GDPplus. I will do a follow-up post when the GDPplus numbers are released.Key Take AwayMeanwhile, the key take away from this release is the economy likely is not humming the way media and Biden present.Why Are Americans in Such a Rotten Mood? Biden Blames the MediaOn November 17, I discussed the rotten mood of consumers. Polls show people do not think the economy is humming.For discussion, please see My explanation is certainly not the media, which no doubt will be crowing over these reports. Rather, it’s the price of rent and food.CPI RentRent of primary residence, the cost that best equates to the rent people pay, jumped 0.5 another percent in October. (Click on image to enlarge)
CPI month-over-month data from the BLS, chart by MishFor discussion of rent, please see Rent of primary residence has gone up at least 0.4 percent for 27 consecutive months!People keep telling me rents are falling, I keep saying they aren’t (and the data proves it).The Average Increase in the Price of Food Every Month for 32 Months is 0.6 PercentTalk of a tame CPI report this month is entirely an energy mirage and easy year-over-year comparisons. Food is a particular case in point.(Click on image to enlarge)
CPI data from the BLS, chart by MishPlease note Is the economy great? For whom?Real GDI is More BelievableRecall that “real” means inflation adjusted.Incomes have been rising, that’s for sure. But how fast are incomes rising relative to inflation?Could it be 1.5 percent is a much better number than 5.2 percent?Based on GDI, a very reasonable case can be made that the economy went into recession and/or is still flirting with recession.Nonetheless, expect a bunch of glowing comments today on how great this economy is.More By This Author:Huge Collapse In New Home Sales On Top Of Steep Negative Revisions Extreme Hype Required To Get Attention: Climate, Politics, And $10 Million Bitcoin It’s Not Easy To Avoid Buying Items Made Or Sourced In China
