GDP Thoughts, Natural Gas Summary

Today, we were blessed with the Advance Estimate of 3rd Quarter GDP Release, from the BEA.

You can read the report and check the data. Here are some of my thoughts. I can clearly see the GDP in 2012 dollars, increased by $126.4B. The drag of our trade imbalance slid by -$156.5B. In other words... if the trade imbalance had remained steady, everything else was negative. Throw in the gain for consumer spending of +$59.5B and the everything else is very negative.

I am not exactly optimistic going forward and fail to see much to be enthusiastic in this report. The first and second quarter trade imbalance, which had jumped dramatically was a result of early ordering to ensure on time delivery and early ordering to beat the port strike, that never materialized. 

Not sure the consumer can continue to accelerate spending in the 4th quarter, as inflation headwinds are starting to seriously erode purchasing power. 

As for the impact on GDP by inflation...

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I read the term re-balancing being used for the big change in import/export numbers. That rebalance will be not be so prevalent in the 4th quarter. Which means the consumer needs to pick up the pace to have a positive 4th quarter. I cannot see that happening. Further I have previously stated the GDP numbers for 1st and 2nd quarters were badly distorted by the trade imbalance. 

Without the trade distortions, the 1st and 2nd quarter may have been positive and the 3rd quarter slightly negative, as in that much ballyhooed 1st of 2 consecutive quarters of GDP shrinkage.

On to natural gas, with today's update from EIA.GOV.

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Inventory is still improving and pricing is also showing some declines. The latter being a result of European facilities being nearly full and LNG tankers stacking up off shore of Spain, etc. 

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This trend will not continue, as we haven't gotten to cold weather. Europe will need to be refilled for the following winter, which means another round of upward prices. Add in the addition of LNG facilities on both sides of the Atlantic, as well as many more LNG carriers... the price hikes could be steep on the USA side, although some abatement in Europe.