The Bureau of Economic Analysis (BEA) has released the first estimate of Gross Domestic Product (GDP) for the third quarter (July, Aug, Sept). [DATA HERE] The top line number of two percent GDP growth is significantly worse than most economists and financial pundits expected.
The second quarter GDP was 6.7%, so a slow down to 2% is very significant considering the economy should be rebounding and reopening after the COVID-19 impacts. However, when we dig into the details [Table One] you will see how what is happening in your life is actually reflected in the data. None of this should be a surprise, as the data is simply reflecting what is happening in your personal checkbook economics.
First, here’s the media jaw agape, with false explanations and justifications:
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The drop has nothing to do with the ‘delta variant’, and everything -EVERYTHING- to do with inflation and impacts from Joe Biden’s economic policies.
Let’s take a look at the details, and you will see how the national GDP is simply a reflection on what we are doing to survive the Biden economy.
GDP growth is the measure of what is happening inside the U.S. economy. GDP reflects the value of goods and services produced in the U.S. minus the value of goods and services we import from outside the U.S.
Consumer spending represents two-thirds of our overall U.S. economy. When Americans stop buying stuff, our GDP drops.
A few things to remember about the value of goods and services. Inventories are an asset, increases in the inventories of goods we produce is a positive driver of GDP. Those inventories become sales, and those sales are also calculated in the value of goods we build, like houses. Considering how much housing values have increased; and considering how much more value that should add to the GDP overall; when the economy “decelerates”, as housing values increase, that tells you something is profoundly askew.
Consumer spending represents two-thirds of our overall GDP growth. Now take a look at the data in Table-1
Notice what is highlighted? Massive drops in consumer purchases of Goods (-9.2%), specifically in consumer spending for ‘Durable goods’ -26.2%
That statistic should not come as a surprise to those CTH readers who have followed along in the past few months. That statistic is simply a reflection of what we are doing. We are paying so much more for energy, gasoline, fuel, housing and food (all driven by inflation), that we are not spending on durable goods like cars, trucks, or long term appliances, electronics or other non-essential items.
-26.2% in one quarter is a massive contraction in the purchasing of durable goods. However, it should not be a surprise. Overall inflation increased 5.4% in the third quarter as measured within this first estimate analysis of GDP. However, inflation on food and gasoline was more than four to eight times higher, respectively, than overall inflation. As a result, disposable income has collapsed:
“Disposable personal income decreased $29.4 billion, or 0.7 percent, in the third quarter”, according to the top line first analysis. However, again this is a preliminary estimation and reflects a very skewed data point. With inflation on essential items running much higher than wage growth, the -0.7 percent first estimate for personal income is profoundly generous to the Biden administration. We can expect the second estimate in late November -with more complete details- to be a significant downward revision because disposable incomes have dropped much more than -0.7%.
Purchases for durable goods do not drop by 26% with only 0.7% drops in income. Look at your own checkbook economics. All of us blue-collar and working class folks are hunkering down and prioritizing food, fuel and home heating costs. We are not out buying new stuff.
Private residential sales are down 7.7% in the July, August, Sept, period according to the BEA data. Remember when CTH said at a macro level housing prices peaked in the last two weeks of May and first two weeks of June? There’s another supportive data-point.
Yes, there are regional impacts from relocation that are driving home values up in key regions like Florida and some suburban neighborhoods as people flee the crazy. However, overall home values have peaked, and only institutional investors (not families) are purchasing them now. Those institutional investors are buying property because they need tangible assets…. because their paper assets are extremely vulnerable. Vanguard and Blackrock purchasing houses gives them a tangible asset they can then leverage for pennies on the dollar for more low interest loans from the fed. Those houses are then turned into rental incomes feeding the mothership.
Lastly, exports should be a benefit to GDP, but as you can see in Table-1 exports are -2.5%, we are exporting less value in part because the value of our currency has dropped so dramatically.
The bottom line is this. The first estimate of Q3 GDP growth is merely a reflection of what you know is happening in your life and around your neighborhood. The next revision to this data (late November) will be lower than the first estimate because you can see the first estimate has not yet caught up to the current status as it existed in September.
Today I saw a headline that said unemployment was down and the economy is great!
Lying, deceitful, a moral, immoral, satanic Commie Dems.
The widget production was excellent this quarter!
Therefore, your widget ration will be reduced by 10%
Autos are in durable goods and dealer lots have never been as low as they have been recently. There is probably a miss there, but not nearly as profound as reported.
The average age of autos on the road continues its upward rise. It was reported to be 12.1 years of age last year.
Our Ford Dealership has no new cars on the lot. It is empty.
No chips.
The average age of my three vehicles is 35 yrs. No fear of Chi-Com EMP expected.damage Plus plenty of older parts still on the shelf..
I’m seriously considering an older MB station wagon. Pre-chip! Diesel so it can be converted to bio-diesel.
I live in WNY and own a 2010 luxury SUV crossover.
We’re considering replacing it as the repair costs escalate. However, the inventory out there is non-existent!
My husband drives around the local car dealer lots late at night to see what’s there. NOT MUCH! A lot of very EMPTY car lots! It’s far worse than after Obama’s “cash for clunkers” scheme! It’s very eerie! (Even in the middle of summer!)
Empty shelves.
Empty car lots.
What’s next?
Empty wallets?
And then Joe puts his Bust Bankaccounts Better bill. Each page of the bill costs over $1B. And I would bet that it won’t include that $450,000 payment to EVERY illegal who crossed the border or tried to while the Remain in Mexico policy was in effect and the wall was being build. Mental anguish? I have a great case of it just thinking how Joe and his crony capitalists are trying to empty my bank account to fill theirs and how to reduce my lifestyle to that of the cave man while they yuck it up high on the hog! These people are sick. Obviously they haven’t paid attention to the countries where this insanity has taken place before and haven’t seen what the people have done to their ilk when they are fed up with the crap!
Solution. Every state declare its own sovereignty. We do our own thing. Cooperate with each other and starve out the Fed. The abuse stops when the abused leave.
No trucking anything to the states that support seditionist’s. FJB.
I have stopped buying anything from Blue states, If I need a specialty item that I have to order online and the State is California, NY, Illinois, etc. I find another place to buy from, more specifically a Red State.
^^^ THIS I like. ^^^
Truckers as Warriors!
https://www.dailymail.co.uk/news/article-10142183/Biden-considering-awarding-450-000-person-families-separated-border-Trump-policy.html
Then, add this to the pile. I feel,physically sick. We are well educated professionals. I’m driving a Ford with 250k miles on it. My husband works 6 days a week. We aren’t living large.
And if I recall , PDJT was separating minors from men ( traffickers ) who weren’t dna test / genetically related to the children they were accompanying.
They were rescuing trafficked children.
That is exactly what they did. It was to keep the kids from getting sold to pedos.
And he was legally required to separate them by liberal judges who wanted the children in non-incarcerated settings.
Us deplorable s haven’t started the civil war yet….we need more prodding
ACLU simply rolling as a Campaign-Kickback cutout.
Well, it is kind of entertaining as the ‘Magical Thinkers’ expose themselves as ‘shocked’ and ‘surprised’ at the news of poor economic performance. Seriously, what the hell did you think would happen with the inflation numbers the way they are – people are diverting discretionary spending to necessity spending because the necessities have all rocketed up in price! I personally am shocked it was that high – but I also know that it’s probably much worse and they’re making it up. Can’t send people panicking with black Friday just around the corner… I know that we’re not spending one thin dime on any of their crap until the house is paid for (2 months to go).
I saw where it cost about 2 cents or more to make one penny not too hard to believe why 3.5 trillion spendings cost zero I know it’s Halloween, but I don’t have bolts in my neck. FJB gets connected it’s alive
I grew up in the ’70s.
Some people have it so cushy today that their biggest concern is their pronouns.
They will not fare well.
Me too ! I remember trying to master the stick shift on my 1972 Fiat Spyder. It was so tight it took me weeks to learn to drive it without stalling. ????
My late dad had one! What fun!
I grew up with really lean times! Government cheese and powdered milk. Dad listened to Carter, and we froze getting ready for school in the morning.
It was perfectly miserable, but it toughened us!
May their chains rest lightly on them.
Biden has been great for shoe sales.
But now it’s shoe season, and people spent all their Joe Bux already.
So we have a huge over supply of shoes.
One segment of the market that is not showing inflation:
SHOES
Highlighting the percentage drop for the quarter only tells part of the story.
Look at the change from Q1 (50) to Q2 (11.6) to Q3 (-26.2).
Wow!
Next quarter should be a doozy. Smh… Stock up on essentials while you can. Bulk bags of rice, flour, beans, and cans of tuna if you’re trying to do it cheap.
Don’t fergit the ramen!!!!
???
Please continue to boycott Amazon and support your local, family owned businesses.
Amazon Tumbles After Missing Revenues And Earnings, Guiding Far Below Consensus
https://www.zerohedge.com/markets/amazon-tumbles-after-missing-revenues-and-earnings-guiding-far-below-consensus
Buy Made in the USA. Not sure if web site exists that is exclusive to Made is USA?
Yes there is. Its usalovelist.com. I have recently purchased flatware, knives and salt and pepper mills from 3 different companies on their list. Love it!
I refuse to give Jeff Bezos one more penny of my earnings. I even bought a Nook so that I could close my Amazon/Kindle account. FYI – did you know that when you pay $12.99 for a book on Amazon that you are not really “buying” it. You are only renting it. When I closed my Amazon/Kindle account, all of the books that I thought I had “purchased” were wiped out.
It is the new paradigm.
Never, ever forget, this is the future brought to the American Citizens by the DNC, GOPe, Dominion through the funding from Soros, Obama, China after receiving USA taxpayer reimbursements, promoted by very corrupt Media outlets while the SCOTUS tours Epstein Island. All hidden behind the fake Wuhanvirus. 2021 continued exposure of stupidity. Their time is fast approaching. No fear?????
It’s all downhill from here:
U.S. in Talks to Pay Hundreds of Millions to Families Separated at Border
Government is considering payments of $450,000 per person affected by Trump administration’s zero-tolerance policy in 2018
The U.S. Departments of Justice, Homeland Security, and Health and Human Services are considering payments that could amount to close to $1 million a family
https://archive.md/zwZ7M#selection-3875.5-3879.122
No problem: No more words, no more laws, no more relying on corrupt politicians or corrupt judges (including SCOTUS). No license required, no bag limit. (of course, no violence).
And just think how much money people have spent laying in supplies for food, paper products, guns etc. Hell, I bought a third vehicle, used of course, because of the shortage of car parts that is coming. This government is a disaster.
The Communist “News Network” (aka, CNN) would be surprised to lean that bears actually “poop” in the woods. They (CNN) are fully woked!! If they tilt their heads too far to one side, all their brain marbles fall out. All their marbles have been lost years ago.
Actually the Communist News Network is actually unhinged AND dangerous. Take a look!
TERROR TV: CNN Cameraman’s Death Threats To GOP Congressman: “I’m going to put a bullet in you. I’m going to put a bullet in one of your f***ing kids too. – Geller Report ~ 10/28/21 ~~~ https://gellerreport.com/2021/10/terror-tv-cnn-cameramans-death-threats-to-gop-congressman-im-going-to-put-a-bullet-in-you-im-going-to-put-a-bullet-in-one-of-your-fing-kids-too.html/
The economy sucks and the illegitimate administration’s economists are forever in disbelief. These are the same individuals, who would be hard pressed in their attempt to manage a lemonade stand.
I’m of the opinion that the huge drop in durables is largely a reflection of the lack of new automobiles to be had. I think this would have to be taken into account to get a truer picture of what’s going on in the economy . . . mind you, the policies of the * administration are responsible regardless . . .
I don’t know. I feel like if people were lining up to buy them, there would be cars on the lot. This supply chain issue gives them cover for the fact that people aren’t buying anything.
Bingo !!
This is the pump before the dump….see the market keeps going up don’t miss it put your future on the line. The fkr s are getting ready to pull the supports out from the market
Exactly this.
Trump had 0 support and we were soooo much better off.
Someone should really make a documentary upon this fact.
Don’t look at me. I spent 20 times the amount of money I normally spend for foods and toilet papers in the third quarter. Now I have enough foods and supplies for the next 5 years. Hope those MREs are as good as advertised.
And yet the fake Dow Jones goes up 200+ points yesterday.
And yet Bidet* will still have a 3% year and Trump won’t.
The idiots on the left will tout this as some evidence that Trump’s economy sucked.
Ugh.