Posted by Joseph Y. Calhoun, III

Third quarter GDP was revised lower:

Real gross domestic product -- the output of goods and services produced by labor and property
located in the United States -- increased at an annual rate of 2.8 percent in the third quarter of 2009, (that
is, from the second quarter to the third quarter), according to the "second" estimate released by the
Bureau of Economic Analysis.  In the second quarter, real GDP decreased 0.7 percent.

 	The GDP estimate released today is based on more complete source data than were available for
the "advance" estimate issued last month.  In the advance estimate, the increase in real GDP was 3.5
percent (see "Revisions" on page 3).

      The increase in real GDP in the third quarter primarily reflected positive contributions from
personal consumption expenditures (PCE), exports, private inventory investment, federal government
spending, and residential fixed investment that were partly offset by a negative contribution from
nonresidential fixed investment.  Imports, which are a subtraction in the calculation of GDP, increased.

      The upturn in real GDP in the third quarter primarily reflected upturns in PCE, in private
inventory investment, in exports, and in residential fixed investment and a smaller decrease in
nonresidential fixed investment that were partly offset by an upturn in imports, a downturn in state and
local government spending, and a deceleration in federal government spending.

No surprises here as this was just about as expected. A couple of observations:

Corporate profits were up $130 billion in the quarter with the bulk of the gain coming at financial companies.
Corporate tax receipts rose
Exports were up 17% but imports rose 20.8%. Devaluing the dollar will not reverse the trade deficit.
Real residential investment rose 19.5%. Housing is now adding to GDP as I predicted earlier this year.
The price index rose 1.4% in the quarter. Do they just make this stuff up?