A Further Review of 3rd Quarter, 2023 GDP... just for fun!!

So yes, the GDP was revised to 5.2% annualized, from 4.9% annualized. That does not mean the economy is robust. It's not bad, but robust is a bit of hype for politicians.

The BEA moved from 2012 dollars to 2017 dollars for the 3rd quarter releases and going forward, until next change in... say 5 years.

In theory, it should have been even across the board, after compensating for 5 years of dollar value adjustments, etc. Such as inflation being about 7.5% during that 5 year period.

If only there was someone, somewhere that downloads those excel spreadsheets from each GDP iteration.

Voila...

Note the column headings for 2012 dollars and 2017 dollars AND the % Change. The changes were clearly not uniform across the various groupings.

While there was a 9% upward adjustment, several groupings failed to match that rise, including some that went negative... while others outpaced the 9% reading.

So in theory, all the numbers going back in time were revised to reflect the current situation. But again, that was very uneven. Just consider the trade deficit, which is a drag on GDP... and those changes.

All in all, it did distort the 3rd quarter readings and possibly provided a misleading annualized number. That would be no big deal... if not for an election year and people willing to make everything political. 

While the current 5.2% annualized is being hailed as something significant, I wonder what will be hailed, when the 4th Qtr. 2023 is revealed on January 25th, 2024. My guess is way below that 5.2%. Back to the 2.0% annualized, or even lower!  

One can imagine the hysteria over such falling numbers, but the adjustment was improperly attributed to a "robust" economy.

So remember... the trade deficit, which is a drag on GDP was revised dramatically lower, after the BIG change for 2012 to 2017 dollars. That trade deficit adjustment was about 100% of that 5.2% annualized, or ±0.1% annualized without that lone adjustment.

You think I might be off my rocker! The current Real GDP rolls in at 22,506.4B, which is a hefty 281B above the 2nd qtr. figure of  22,225.4B. Now take a look at that downward revision of the trade deficit,  -284B. 

Remember the trade deficit is a drag on GDP, so a downward revision in the Trade deficit would result in a higher GDP print. IF the GDP had not been revised downward by -284B, then that +281B gain in GDP would evaporate. As in +0.1% annualized.

Oh well! It is just numbers and you can believe what you want. However... that adjustment was one time only, for the time being and 4Q23 will be significantly lower, imho. How does a drop off from +5.2% annualized to say +1.7% annualized look in an election year. 

One group will claim the economy is crashing into a recession, another group will be saying soft landing is working, and another group will be screaming the FED must cut rates rapidly.

I then ask you, if stating the 3Q23 was actually 0.1% and the 4Q24 was +1.7%, would indeed indicate a possible soft landing. Of course, the groups would likely being crying the same thing... just 3 months earlier.

It is fun to watch all the spin!