The Commerce Department on Friday released its preliminary estimate for third-quarter Gross Domestic Product, which grew 2.0% from the quarter before. The good news was that it was a positive number. The not-so-good news was that most of that statistical increase was due to the build-up of unsold goods. Real final sales grew just 0.6%. Unless inventories move faster, production in Q4 will likely slow.
"This goes down as the weakest recovery in real final sales on record, despite the fact the economy has been on the receiving end of the most pronounced dose of fiscal, monetary and bailout stimulus ever," says David Rosenberg at Gluskin Sheff. "At 60 basis points above zero, real final sales are just a shock away from double-dipping — a shock like looming tax hikes, accelerating fiscal cutbacks at the state/local government level or the millions of '99ers' about to fall off the extended jobless benefit rolls at the end of November."
According to figures released by the Bureau of Economic Analysis this morning, personal incomes were declining by the end of the third quarter. September's drop of 0.1% was the first since the current recovery began in July 2009. Disposable (after-tax) personal income was down 0.2%; inflation-adjusted DPI was down 0.3%. These numbers do not suggest that American consumers will be buying up inventories anytime soon.
Personal income ex transfer payments:
no gain since the recession "ended"