Data Review

November 13th, 2015 10:21 am | by John Jansen |

Via Stephen Stanley at Amherst Pierpont Securities:

The retail inventories data for September came in considerably higher than BEA statisticians had assumed in their preliminary Q3 GDP estimate.  This adjustment, coupled with a similar upward revision to September wholesale inventories earlier this week, implies a sizable upward bump to Q3 GDP.  The wholesale and retail figures each should be worth about three tenths on GDP, taking the tracking estimate today to 2.1% for Q3 real GDP.  Of course, revisions coming for inventories represent a zero-sum game, so the upward revision to Q3 means a downward and offsetting adjustment to Q4 output.  At the moment, I am at 2.1% for Q3 GDP and 2.3% for Q4.  In any case, the mix between the two quarters due to inventory swings is not as important as the average for the second half of the year, which in my view remains in the 2¼% neighborhood.

Meanwhile, the University of Michigan gauge of consumer sentiment improved by more than expected, inching up in early November to 93.1, in line with the year-to-date average.  At the same time, however, the long-term inflation expectations figure held steady at 2.5% in November.  This marks the second month in a row that the gauge has been slightly below the range that has prevailed for years.  I do not expect Fed officials to flip out over a tenth of a percentage point on this inflation expectations gauge, but the low readings in October and November certainly feed into the narrative that the inflation environment remains squishy.

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