Review of August 2024 data, 2Q GDP, PCE and personal income

The monthly summary continues to improve, although PCE ex food and energy inflation numbers continue to be a concern.

A lot of hoopla about the overall, but that PCE ex-F&E edged upward.

Now for the revisions in previous months...

Personal income, etc. is shown here.

The GDP 3rd estimate can be found here.

Note the uptick in the trade deficit. A part of that may be the front loading of imports in preparation of possible East and Gulf Coast port strike, possible on 10-1. Both sides seem to be playing chicken at this point. Each day of a strike would in theory... hamper $4.5 in imports and $2.8B in exports. 

That front loading should likely have a bit of drag on 3rd Quarter GDP, but certainly not like the 1st half of 2022... which was almost entirely responsible for those back to back negative quarters.

By end of October, we will have the first glimpse of 3Q GDP and whether there was a strike.

Review of July 2024 data, 2Q GDP, PCE and personal income

The monthly summary continues to improve, although PPI numbers continue to be a concern... going forward. 

Regarding personal income, etc., read here.

The 2nd quarter GDP was revised upward. I was puzzled by the statement regarding consumer spending and thus the headlines of resilient consumers. I would have expected consumer spending to be at or above the overall GDP announcement. 

But that is just me. It is an election year and important to convince the consumers... they are doing well.

Oh Joy!

Review of June 2024 data, 2Q GDP, PCE and personal income

The monthly summary continues to improve, although PPI numbers continue to be a concern... going forward.

Regarding personal income, etc., read here.

The 2nd quarter GDP came in above expectations at 2.8% annualized. I was puzzled by the slower growth in Services at 2.2% annualized, which helps explain the 2.3% annualized for personal consumption. Durable goods up 4.6% and nondurables at 1.4%, both annualized.

Overall a good report, but I would be a bit concerned if fixed investment can continue its expansion, which is equipment driven, while inventories keep building.

As for the PCE excluding food and energy... not much movement. Granted the market is anticipating a rate cut in September... and it might be warranted. A string of rate cuts might not be so warranted, imho. 

We can start the cycle again for next month, with the likelihood of CPI being at or slightly above this past month's reading. 

Review of May 2024 data, 1Q GDP revisions, PCE and personal income

The monthly summary continues to improve, although PPI numbers are of concern... going forward.

Regarding personal income, etc., read here.

The GDP for 2024Q1 was revised ever so slightly upward to 1.4% annualized. Only time will tell if that gets revised on September 26th.

Review of April 2024 data, 1Q GDP revisions, PCE and personal income

The monthly summary is not so bad, actually.

The best that can be said, is inflation has stabilized, with a further slowing in the cards, by end of the year.

What is striking, is the downward tilt in disposable income AND personal consumption expenditures.

If you carefully look, the previous month was also revised downward, for those two items.

If spending is slowing, it would follow that demand is slowing, which would/should... slow inflation going forward.

As for the GDP revision... it was not unexpected. The story has now become the service sector. Not terribly worrisome, but what caught my eye, is the trade imbalance, which jumped. 

Oh well, that's a wrap for May.

Review of March 2024 data, 1Q GDP, PCE and personal income

The monthly summary is not so wonderful, incomparison...

Inside all that pink is some troubling food related issues. Even though energy is somewhat in a narrow band, the food outlook is upward. The CPI-U expectations for the report on April, seemingly indicates a repeat of Mar-2024, outpacing the monthly core, although core is expected to ease a bit. Still above the overall CPI-U.

As for the personal income arena... this is the link... https://www.bea.gov/news/2024/personal-income-and-outlays-march-2024

There seems to be quite a jump in spending, versus Disposable personal income... for 2 consecutive months. Not sure there was much cash on hand, so the disposable is likely in the form of additional debt. 

Of course the above report mentioned a rise in goods. Perhaps it did, but the 1Q GDP did not reflect that. 

As for GDP, it now stands at 1.6% annualized for 1Q2024. The Trade deficit loomed large in the quarter and shows no signs of abating.

The reports for the month, ended up in so-so territory, imho. I am sure it will get spun hard in each direction. 

Review of February 2024 data, 4Q GDP Revision, PCE and personal income

The monthly summary...

The overall PCE edged upward, on annual basis, with PCE ex food and energy staying flat. 

Of course, the official got revised up for January, which indicates a difference from my report...

As for the personal income arena... this is the link... https://www.bea.gov/news/2024/personal-income-and-outlays-february-2024

Note the revisions as always, and I would recommend tracking the data monthly. Revisions are normal part of the cycle, as more data comes in. Recently however... previous data seems to come in a tad lower, which results in inflated current estimates. This was not always the case.

As for GDP, it seems to have edged up for 2023-4Q. I am not going to beat that horse over trade deficit numbers. I will simply state that prior to transfer of data from 2012 dollars into 2017 dollars, the GDP was marginally better. That adjustment amounts to about 1.9% annualized. So just take that with a grain of salt, as it is just my opinion.

One remaining bit of info can be found here. While I might harangue about the national debt, the 2023 year end net international investment was released. UGLY, at almost $20T. THAT IS WHAT WE OWE OTHER COUNTRIES.

https://fred.stlouisfed.org/series/IIPUSNETIQ

Review of January 2024 data, 4Q GDP Revision, PCE and personal income

The monthly summary...

The downward shift in inflation continues across the board, with the exception of my price index, which is more about healthcare than any other weightings.

There were modest revisions in the PCE report, which are highlighted in Red.

I have made much of government spending on the GDP, but historically... not so abnormal (all charts from 2000Q1 onward...

A bit grainy in the upload, but trends are evident. The worrying factor is the trade deficit, while showing a bit of improvement the past few months, is still staggering compared to 10 years ago.

Bored silly, so will leave it there. 

Review of December 2023 data, 4Q GDP, PCE and personal income

Alas, 2023 reports have concluded. The GDP's 4Q advance reading indicates a sterling 3.1% rise. I will make mention of the 5 year Quinquennial revision from 2012 dollars to 2017 dollars. As would be expected the numbers jumped 9.0%. I can't help but notice the big drag on GDP of net exports of good and services, slid a whopping -26.7%. 

Even under the revised numbers, that latter component fell another -5.9% from one year ago.

PCE, which is typically 68.7% of GDP under the 2017 revision, made up 58.3% of that yearly increase. 

Which gives pause to the notion of the consumer driving those GDP numbers, when in fact they appear to have been a bit of drag.

Gross private investment, also underperformed. The real over achievers were government and net exports of good and services. 

It is what it is.

PCE ex. food and energy ease from 3.4% to 3.2%. The overall remained unchanged.

All in all, a decent end to the 2023 years.

Review of November 2023 data, GDP, PCE and personal income

 I'll try not to harp about this too much. The BEA switched from 2012 dollars to 2017 dollars for 3Q23, and adjusted prior data. I download all such reports, so I can easily tell the difference.

The trade deficit is a drag on GDP, thus in the 2Q23 original report, that drag was -5.95%. As of right now, after those adjustments... the drag is-4.14%. Quite an improvement. The stated +4.9% GDP is a catch up to what can only be viewed as under-reporting of previous quarters. 

How that change affects going forward, is uncertain to me. Given the wide array of expectations for 4Q23, I am thinking not everyone is on the same page. I am done harping about this.

Now on to the PCE report, after reviewing adjustments...

Yes, inflation is slowing, not deflating, with the exception of gasoline, which looks to have stopped falling.

The monthly summary...

All in all, a pretty good monthly report card. I do think the market is making too big a deal on expectations of the FED cutting rates before summer, but what do I know?

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!

Review of October 2023 data, GDP, PCE and personal income

Just some charts with a bit of commentary...

The headlines proclaimed a resilient consumer propelled the advance estimate of 4.9% annualized... to 5.2%. Seriously, the PCE slipped from 4.0% to 3.6%. You could toss in Residential investment, but you still come up lacking. 

It was a good report, but could have done without the spin, imho.

A couple of charts about PCE. Adjustments are in red. Again, a good report.

And to finish up the charts...

October ended up being an all around good month. May it continue.