Surprise 3Q GDP Report Smells A Little Fishy

In the wake of revelations that the pre-election unemployment numbers were fudged it's wise to take statistics produced by government with a grain of salt.

Gary Halbert:

The government reported that the significant increase in 3Q GDP was due to increases in (in order): private inventory growth, consumer spending, exports, non-residential fixed investment and state and local spending. The only negative contributions in the 3Q were in federal government spending and imports.

Today’s report also noted that the change in real private inventories alone added 1.68% to the 3Q increase in GDP, after adding only 0.41% to the 2Q change. According to the report, private businesses increased inventories by a whopping $116.5 billion in the 3Q, following increases of only $56.6 billion in the 2Q and $42.2 billion in the 1Q.

The report did acknowledge that 3Q GDP – without the big increase in inventories – rose only 1.9% in the 3Q, compared to an increase of 2.1% (without inventory growth) in the 2Q.

Read the whole thing.