Sunday, November 22, 2015

Analysts: Q3 GDP to be Revised Up

by Bill McBride on 11/22/2015 11:55:00 AM

Note: The second estimate of Q3 GDP will be released on Tuesday. The consensus is that real GDP increased 2.1% annualized in Q3, revised up from the advance estimate of 1.5%. Note that domestic demand was solid in Q3, and that the weakness was mostly due to changes in inventory.

Merrill Lynch on GDP revision:

In the second release of 3Q GDP, we expect growth to be revised up to 2.1% qoq saar from the preliminary estimate of 1.5%. Inventories will be the primary driver, as stronger-than-anticipated September data revealed less inventory drawdown than initially assumed. Instead of a 1.4pp drag on 3Q growth, inventories will likely have a negative contribution closer to 0.8pp. Elsewhere, consumer spending and residential investment will likely be revised up, while structures investment should head lower. Advance trade data released at the same time as GDP may contain revisions to 3Q, so there is some uncertainty in our forecast.

We expect the GDP price index to be unrevised at 1.2% qoq, with the core PCE price index similarly unrevised at 1.3%.
And from Nomura:
We expect Q3 GDP to be revised up by 0.9pp in its second estimate to 2.4% from 1.5%. We expect the upward revision to be primarily due to stronger-than-assumed inventory investment. Domestic demand in the aggregate should remain roughly unchanged, as upward revisions to government spending and residential fixed investment were likely countered by weaker-than-expected business investment. We expect final sales growth to remain at 3.0% and forecast that inventory investment will subtract 0.6pp from growth compared with the assumed 1.4pp previously.