3Q U.S. GDP Revised to 8.2%, Profits Exploded

November 25, 2003

By Tom Moeller

· US economic growth last quarter was revised upward to 8.2% (AR). Consensus expectations had been for a revision to 7.8%.

· Corporate profits w/IVA & CCA exploded, rising at a 56.0% annual rate (30.0% y/y. That followed a 45.7% gain in 2Q. The burst came as profits after tax jumped 49.8% (13.6% y/y), the biggest quarterly jump since 4Q 1992. Profits in the nonfinancial corporate sector (calculated from the income side of the NIPA) jumped at a 75.2% rate (43.2% y/y).

· The GDP revision stemmed primarily from  inventories. Slight accumulation, the first since 4Q02, is now shown adding 0.2 percentage points to output growth instead of subtracting 0.7 points. 

· Domestic final demand growth also was revised upward to 6.8% from 6.6% as business investment in equipment & software was revised to 18.4%, the fastest since 4Q 1998. Growth in residential investment also was revised up to 22.7% but PCE growth was lowered slightly to 6.4%.

· Improvement in the foreign trade deficit was unrevised and it added 0.8 percentage points to GDP growth. Export growth was revised up to 11.0% and imports were revised up less to 1.5%. 

· Inflation was revised down slightly to 1.7%. The PCE price deflator was up 2.3% but excluding food and energy rose just 1.0% (1.2% y/y).

 
Chained '96 $, % AR 3Q'03 (Prelim.) 3Q'03 (Advance)

2Q'03

 Y/Y

2002

2001
GDP 8.2% 7.2%

3.3%

  3.5% 2.4% 0.3%
  Inventory Effect 0.2% -0.7% -0.7% -0.3% 0.6% -1.2%
Final Sales 8.0% 7.8% 4.0% 3.8% 1.8% 1.5%
  Trade Effect 0.8% 0.8% -1.3% -0.2% -0.7% -0.2%
Domestic Final Demand 6.8% 6.6% 5.1% 4.0% 2.4% 1.6%
Chained GDP Price Deflator 1.7% 1.8% 1.0% 1.7% 1.1% 2.4%

 

Weekly Chain Store Sales Up

November 25, 2003

By Tom Moeller

· Chain store sales rose 0.4% and gained back half of the 0.8% drop the week prior according to the BTM-UBSW survey.

· So far in November sales are 0.5% ahead of last month's average. That followed a 0.6% m/m decline during all of October.

· During the last five years there has been a 61% correlation between the year-to-year percent change in the BTM-UBSW measure of chain store sales and the change in non-auto retail sales less gasoline.

· The BTM-UBSW retail chain-store sales index is constructed using the same-store sales reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart. 

   
BTM-UBSW (SA, 1977=100)

11/22/03

11/15/03

Y/Y

2002

2001

2000
Total Weekly Retail Chain Store Sales 423.3 421.7 5.6% 3.6% 2.1% 3.4%

 

Consumer Confidence Up More Than Expected

November 25, 2003

By Tom Moeller

· The Conference Board’s Index of Consumer Confidence rose to 91.7 in November, the highest level in over a year. Consensus estimates were for a gain to 84.0 and October's level was revised up slightly. 

· The expectations index jumped to 99.4 from 91.5 in October, the highest level since June 2002. The reading of the present situation jumped for the second month to 80.1.

· The 12.2% m/m rise in Confidence outpaced the 4.4% November increase in Consumer Sentiment reported by the University of Michigan.

· Jobs were viewed as hard to get by 29.5% of respondents, the lowest since April. The appraisal of the present situation improved to its best since the summer of 2002.

· The Conference Board’s survey is conducted by a mailed questionnaire to 5,000 households and about 3,500 typically respond.

 
Conference Board

Nov

Oct

Y/Y

2002

2001

2000
Consumer Confidence 91.7 81.7 8.0% 96.6 106.6 139.0

 

Existing Home Sales Down in October

November 25, 2003

By Tom Moeller

· Sales of existing single family homes reported by the National Association of Realtors fell 4.9% in October to 6.35M. The decline was greater than Consensus expectations.

· Record sales in September were revised down slightly. The figures reflect closings of home sales in earlier months.

· Sales fell across the nation. In the Northeast sales fell 2.7% (10.6% y/y). In the West sales fell 9.2% to 1.68M (12.8% y/y). Sales in the Midwest were down 4.9% (9.7% y/y) and in the South sales fell 2.7% to 2.57M (14.7% y/y).

· The median price of an existing home rose m/m to $172,400 (+8.2% y/y) but the prior month was revised down.

· The latest release from the National Association of Realtors is available here.

 
Existing Home Sales (000, AR)

Oct

Sept

Y/Y

2002

2001

2000
Existing Single-Family  6,350  6,6680 12.8% 5,595 5,292 5,158

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