Q3 GDP Revisions Final Failure

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The final revision for Q3 GDP is still indicative of a recession.  The NBER already declared a recession was in effect since last December, but this was the first quarter to actually show negative real GDP.  The final revision came in unchanged at -0.5%, and the estimate was -0.6%.

Corporate profits after taxes were revised lower to -3.2% to roughly$1.3 trillion in the July through September Q3 period.  Consumerspending was revised to a tad worse -3.8% in Q3, which accounted for2.75 points of the drop in GDP.  Durable goods spending by consumerswas down 14.8%.

You can look further and further into the numbers, but if you want adecent holiday season we’d advise you not to.  That was also just thereal start of it to show up in the numbers, so what lies ahead shouldreflect the far-worse numbers we have been seeing over the last 75 daysor so.

What is far more important than revision after revision is what isexpected for Q4.  We have heard that estimates are running as deep as-6% from many.  There will be many changes to those numbers,particularly after we start to see actual earnings in mid-January fromkey companies.

The new acronym for "GDP" during the holiday season is, "Got Depression Presents?"

Jon C. Ogg
December 23, 2008