30 Nov BEA Ups Q3 GDP Estimate On Stronger Inventory Data
Americans spent more on goods but less on clothing and footwear than initially thought in the third quarter, according to the government’s second estimate of the country’s gross domestic product for the period.
The Bureau of Economic Analysis boosted its estimate of GDP growth during the quarter to 2.1 percent from 1.5 percent after digesting additional data that showed nonfarm private inventories, including inventory held by retailers and distributors, declined 0.64 percent, or much less than the the 1.45 percent declined estimated last month.
Some of the decline is due to U.S. retailers canceling or reducing orders for cold weather apparel and footwear in response to unseasonably warm October and November weather. Dick’s Sporting Goods, Sportsman’s Warehouse Holdings Inc., DSW Inc., several department stores and many independent retailers have reported lower than expected third quarter sales in recent weeks due to unseasonably warm October weather. As reported by Sports Executive Weekly last week, Dick’s Sporting Goods is returning product, canceling orders and securing markdown allowances with vendors to reduce its exposure to slow-moving inventory, according to sSports Executive Weekly.
Revised GDP estimates released by BEA Tuesday indicate U.S. consumers shifted more of the money they saved on lower energy bills during the period toward non-durable goods than originally thought following several quarters in which spending on cars and other durable goods grew faster.
The BEA upped its estimate of growth in consumer spending on all goods to 1.05 percent from 0.99 percent. Revised estimates show consumer spending on non-durable goods grew more than thought while spending on durable goods grew less than indicated by advance estimates.
While consumers spent more on nondurable goods than originally estimated, BEA took down its estimate on the increase in spending on clothing and footwear to 0.04 percent from 0.05 percent.
It also lowered its estimate of consumer spending on services from 1.20 percent to 1.00 percent to reflect lower spending on housing and utilities, health care, recreation services, food and restaurants, financial and other services. Estimates of growth in spending on transportation services remained flat at 0.12 percent.
Consumer spending on durable goods, including automobiles, grew less than thought, although spending on recreational vehicles grew more than indicated by advance estimates released last month.
In its advance estimate last month, BEA attributed the deceleration in real GDP in the third quarter primarily to a downturn in private inventory investment and decelerations in exports, in PCE, in nonresidential fixed investment, in state and local government spending, and in residential fixed investment that were partly offset by a deceleration in imports.