Today’s release of second estimate of third-quarter GDP reveals that the economy expanded at a slower pace than originally reported. The initial 3.5% annualized real growth in the U.S. for Q3 was, we’re now told, just 2.8%.
Meantime, corporate profits skyrocketed in Q3. As companies shed payrolls, the cost saving flowed to the corporate bottom line. Profits jumped 13.4% during the July-September 2009 period at an annualized rate. That’s the biggest percentage gain since 2004.
Meantime, consumer spending wasn’t quite as strong as originally estimated in the first print of the GDP report. Consumer spending was revised down to a 2.07% increase from 2.36% initially.
In addition, imports exceeded exports by a higher degree than originally calculated. The change helped trim the second round of estimating GDP for Q3. The U.S. appetite for foreign goods and services surged nearly 21% in the third quarter, the most since 1985.
Inventories slipped a bit more than the first Q3 GDP numbers advised, dropping by a bit more than $133 billion. That’s slightly more than the $130.8 billion initially reported. But that may be good news in the sense that the inventory drop implies that production will ramp up that much more in the future to compensate for lower supplies.
But don’t start celebrating just yet. Perhaps we should wait for the third and final estimate of Q3 GDP, which will be dispensed on December 22, just in time for the holidays.