Q3 GDP revision, November’s income & outlays, retail sales, industrial production, new home construction, & existing home sales; October’s business inventories

As is usual in advance of the holidays, a number of the reports that are normally released during the last week of the month were accelerated into this past week…that meant that this week saw the 3rd estimate of 3rd quarter GDP and the November report on Personal Income and Spending, both from the Bureau of Economic Analysis, in addition to the the Retail Sales report for November and the Business Sales and Inventories report for October, both from the Census Bureau, and the November report on Industrial Production and Capacity Utilization from the Fed, as well as the November report on New Residential Construction, also from the Census bureau, and the Existing Home Sales Report for November from the National Association of Realtors….in addition, on Friday the Bureau of Labor Statistics released the Regional and State Employment and Unemployment Summary for November, a report which breaks down the two employment surveys from the monthly national jobs report by state and region….while the text of that report provides a useful summary of this data, the serious statistical aggregation can be found in the tables linked at the end of the report, where one can find the civilian labor force data and the change in payrolls by industry for each of the 50 states, the District of Columbia, Puerto Rico, and the Virgin Islands…

This week also saw the release of the first three regional manufacturing survey for December; the Empire State Manufacturing Survey from the New York Fed, which covers all of New York state, an adjacent county in Connecticut, Puerto Rico and northern New Jersey, reported their headline general business conditions index fell to +0.2 in December, down from +31.2 in November, meaning that Second District manufacturers are just about evenly split between those reporting improving business conditions and those reporting deteriorating business conditions, after a significant majority of them had reported improving conditions last month…at the same time, the Philadelphia Fed Manufacturing Survey for December, covering most of Pennsylvania, southern New Jersey, and Delaware, reported its broadest diffusion index of manufacturing conditions fell from a reading of -5.9 in November to –16.4 in December, its lowest reading since April 2023, indicating that deteriorating conditions among that region’s manufacturers have become quite a bit more widespread than a month ago, while the Kansas City Fed manufacturing survey for December, covering western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico, reported its broadest composite index slipped to -4 in December, from -2 in November and from -4 in October, which means that a small plurality of 10th District manufacturers continued to see deteriorating conditions again in December were almost matched by those who saw improvement..

3rd Quarter GDP Growth Rate Revised Up to 3.1% in 3rd Estimate

The Third Estimate of our 3rd Quarter GDP from the Bureau of Economic Analysis indicated that our real output of goods and services increased at a 3.1% annual rate in the quarter, revised from the 2.8% growth rate reported in the second estimate last month, as upward revisions to growth in personal consumption of services, to fixed investment, and to net exports more than offset a downward revision to growth of private inventories….in current dollars, our third quarter GDP grew at a 5.030% annual rate, increasing from what would work out to be a $29,016.7 billion a year output rate in the 2nd quarter to a $29,374.9 billion annual rate in the 3rd quarter, with the headline 3.1% annualized rate of increase in real output arrived at after annualized GDP inflation adjustments averaging 1.9%, unrevised from the second estimate, were computed from the price changes of the GDP components and applied to their current dollar change….

Recall that the GDP news release reports all quarter over quarter percentage changes at an annual rate, which means that they’re expressed as a change a bit over 4 times of that what actually occurred from one 3 month period to the next, and that the prefix “real” is used to indicate that each change has been adjusted for inflation using price changes chained from 2017, and then that all percentage changes in this report are calculated from those 2017 dollar figures, which would be better thought of as a quantity indexes than as any reality based dollar amounts….for our purposes, all the data that we’ll use in reporting the changes here comes directly from the pdf for the 3rd estimate of 3rd quarter GDP, which one can access from the BEA’s GDP landing page… specifically, we reference table 1, which shows the real percentage change in each of the GDP components annually and quarterly since the 4th quarter of 2020; table 2, which shows the contribution of each of the components to the GDP figures for those quarters and years; table 3, which shows both the current dollar value and inflation adjusted value of each of the GDP components; and table 4, which shows the change in the price indexes for each of the components……the pdf for the 2nd quarter’s second estimate, which this estimate revises, is here…

Growth of real personal consumption expenditures (PCE), the largest component of GDP, was revised from the 3.5% growth rate reported last month to a 3.7% rate in this 3rd estimate…that growth rate figure was arrived at by deflating the 5.30% growth rate in the dollar amount of consumer spending with the PCE price index, which indicated that consumer inflation increased at a rounded 1.5% annual rate in the 3rd quarter, which was unrevised from the PCE inflation rate reported a month ago….real consumption of durable goods grew at a 7.6% annual rate, which was unrevised from the 2nd estimate, and added 0.54 percentage points to the GDP growth rate, as real consumption of motor vehicles and parts grew at a 9.0% annual rate and accounted for almost a third of the growth in durable goods output….meanwhile, real consumption of nondurable goods by individuals grew at a 4.6% annual rate, which was also unrevised from the second estimate, and added 0.63 percentage points to the 3rd quarter’s economic growth rate, as increased real consumption of nondurable goods other than groceries, clothing, and gasoline accounted for nearly two-thirds of the growth in nondurable goods output…..at the same time, real consumption of services grew at a 2.8% annual rate, revised from the 2.6% growth rate reported last month, and added 1.31 percentage points to the final GDP growth tally, as as health care services grew at a 7.1% rate and accounted for almost three-quarters of the quarter’s growth in services…

Meanwhile, seasonally adjusted real gross private domestic investment grew at an 0.8% annual rate in the 3rd quarter, revised from the 1.1% growth estimate reported last month, as real private fixed investment grew at a 2.1% rate, revised from the 1.7% growth rate reported in the second estimate, while the growth of inventory investment was less than was previously estimated… investment in non-residential structures contracted at a 5.0% annual rate, revised down from the 4.7% shrinkage rate previously reported, while real investment in equipment was revised to show growth at a 10.8% rate, revised up from the 10.6% growth rate shown in last month’s estimate…at the same time, the quarter’s investment in intellectual property products was revised from growth at a 2.5% rate to growth at a 3.1% rate, while real residential investment was shown to be contracting at a 4.3% annual rate, revised from the 5.0% contraction rate shown in the previous report…after those revisions, the decrease in investment in non-residential structures subtracted 0.16 percentage points from the 3rd quarter’s growth rate, while the increased in investment in equipment added 0.54 percentage points to the quarter’s growth rate, and growth in investment in intellectual property added 0.17 percentage points to the growth rate of 3rd quarter GDP, while the contraction in residential investment subtracted 0.18 percentage points from the growth rate of the 3rd quarter's GDP…

At the same time, investment in real private inventories grew by an inflation adjusted $57.9 billion in the 3rd quarter, revised from the previously reported inventory growth at an inflation adjusted $64.1 billion rate…that came after inventories had grown at an inflation adjusted $71.7 billion rate in the 2nd quarter, and hence the $13.8 billion negative change in real inventory growth from that of the 2nd quarter decreased the growth of private investment and subtracted 0.22 percentage points from the 2nd quarter’s growth rate, revised from the 0.11 percentage point subtraction from GDP growth due to smaller inventory growth that was indicated by the second estimate…. however, since a reduction in inventory growth indicates that less of the goods produced during the quarter would have been left in storage or “sitting on the shelf”, the $13.8 billion decrease in their growth means real final sales of GDP were greater by that amount, and therefore the BEA found that real final sales of GDP grew at a 3.3% rate in the 3rd quarter, revised from the 3.0% rate of increase in real final sales shown in the second estimate, and up from the 1.9% real final sales growth rate of the second quarter, when greater inventory growth meant that much of what was produced during the quarter wasn’t sold….

The previously reported increase in real exports was revised much higher with this estimate, while the previously reported increase in real imports was revised higher by less, and as a result the change in our net trade was a smaller subtraction from GDP than was previously reported…our real exports grew at a 9.6% rate, revised from the 7.5% rate reported in the second estimate, and since exports are added to GDP because they are part of our production that was not consumed or added to investment in our country, their growth added 1.01 percentage points to the 3rd quarter’s growth rate, up from the 0.79 percentage point addition shown in the previous report….meanwhile, our real imports increased at a 10.7% rate, revised from the second estimate’s 10.2% figure, and since imports are subtracted from GDP because they represent either consumption or investment added to an other GDP component that shouldn’t have been because it was not produced here, their increase subtracted 1.44 percentage points from 3rd quarter GDP, revised from the 1.37 percentage point subtraction shown last month…..thus, our less negative trade balance subtracted a rounded net of 0.43 percentage points from 3rd quarter GDP, rather than the rounded 0.57 percentage point subtraction that had been indicated by the second estimate..

Finally, the entire government sector grew at a 5.1% rate in the 3rd quarter, revised from the 5.0% growth rate previously reported, as the growth rate of federal government consumption and investment was unrevised, while growth of real state & local government consumption and investment was greater than previously reported….real federal government consumption and investment grew at a 8.9% rate from the 2nd quarter in this estimate, the same growth rate reported in the second estimate, as real federal outlays for defense rose at a 13.9% rate, unrevised from the growth rate shown previously, and added 0.48 percentage points to 3rd quarter GDP, while all other federal consumption and investment grew at a 2.6% rate, revised from the 2.5% growth rate shown previously, and added 0.07 more percentage points to 3rd quarter GDP growth…..meanwhile, real state and local consumption and investment grew at a 2.9% rate during the quarter, which was revised from the 2.7% growth rate reported in the 2nd estimate, and added 0.31 percentage points to the 3rd quarter’s growth, as an increase in real state and local investment at a 4.5% rate accounted for 0.09 percentage points of the state and local contribution…..note that government outlays for social insurance are not included in this GDP component; rather, they are included within personal consumption expenditures only when such funds are spent on goods or services, indicating an increase in the output of those goods or services…

November Personal Income Rose 0.3%; Personal Spending Rose 0.4%; PCE Price Index Rose 0.1%, Core Prices up 2.8% YoY

Following the release of the 3rd estimate of 3rd quarter GDP, the Bureau of Economic Analysis released the November report on Personal Income and Outlays, which gives us nearly half the data that will go into 4th quarter GDP, since it gives us 2 months of data on our personal consumption expenditures (PCE), which now accounts for roughly 69% of GDP, and the PCE price index, the inflation gauge that the Fed targets, and which is used to adjust that personal spending data for inflation to give us the relative change in the output of goods and services that our spending indicated….this report also provides us with our national personal income data, disposable personal income, which is income after taxes, and our monthly national savings rate…however, because this report feeds in to GDP and other national accounts data, the change reported for each of those metrics are not the current monthly change; rather, they’re seasonally adjusted amounts reported at an annual rate…however, the percentage changes are computed from one month’s annualized figure to the next, and in this case of this month’s report, they give us the percentage change in each annualized metric from October to November….

Thus, as they now explain in the opening line of the news release for this report: “Personal income increased $71.1 billion (0.3 percent at a monthly rate) in November“, which means that the annualized figure for seasonally adjusted personal income in November, $25,079.5 billion, was $71.1 billion higher, or nearly 0.3% higher than the annualized personal income figure of $25,008.4 billion extrapolated for October; the actual, unadjusted change in national personal income from October to November is not given…at the same time, annualized disposable personal income, which is income after taxes, also rose by nearly 0.3%, from an annual rate of $21,934.0 billion in October to an annual rate of $21,995.1 billion in November…those increases were arrived at after personal income for October was revised up from $24,962.0 billion annually and October’s disposable personal income was revised up from $21,888.0 billion annually….the monthly contributors to the change in personal income, which can be seen in the Full Release & Tables (PDF) for this release, are also annualized…in November, the ma​i​n ​r​easons for the $71.1 billion annual rate of increase in personal income were a $73.7 billion annual rate of increase in wages and salaries and a $12.0 billion annual rate of increase in supplements to wages and salaries, such as contributions to employee pension funds; personal dividend income, on the other hand, saw a decrease at a $16.7 billion annual rate..

For the personal consumption expenditures (PCE) that we’re most interested in, BEA reports that they increased at a $81.3 billion annual rate, or at a 0.4% rate, as the annual rate of PCE rose from $20,114.2 billion in October to $20,195.5 billion in November….at the same time, October PCE was revised nearly 0.1% higher, from $20,099.5 billion annually to $20,114.2 billion….total personal outlays, which includes interest payments and personal transfer payments in addition to PCE, rose by an annualized $78.2 billion to $21,027.0 billion annually in November, which thus left total personal savings, which is disposable personal income less total outlays, at a $968.1 billion annual rate in November, down from the revised $985.2 billion in annualized personal savings in October… as a result, the national personal saving rate, which is personal savings as a percentage of disposable personal income, fell to 4.4% in November, down from the upwardly revised October savings rate of 4.5%…

As you know, before personal consumption expenditures are used in the computation of GDP, they are first adjusted for inflation to give us the real change in consumption, and hence the real change in goods and services that were produced for that consumption….the BEA does that by computing, mostly from CPI source data, a price index for personal consumption expenditures, which is a chained price index based on 2017 prices = 100, and which is included in Table 5 in the pdf for this report…that index rose from 124.223 in October to 124.382 in November, a month over month inflation rate that’s statistically +0.127996%, which BEA reports as a 0.1% increase, following the increase of 0.2 percent in the PCE price index they reported for October, and yielding a 2.8% year over year PCE inflation rate, the same annual increase shown in October’s report… applying the actual November inflation adjustment to the nominal change in spending meant real PCE was up by 0.27584% in November, which the BEA reports as a 0.3% increase, following October’s rounded real PCE increase of 0.1%…notice that when those ​PCE price indexes are applied to a given month’s annualized PCE in current dollars, it yields that month’s annualized real PCE in chained 2017 dollars, which are the means that the BEA uses to compare one month’s or one quarter’s real goods and services produced to another….that result is shown in table 4 of the PDF, where we see that November’s chained dollar consumption total works out to 16,237.5 billion annually in 2017 dollars, 0.27543% more than October’s 16,192.9, which the BEA rounds up and reports as a change of 0.3%…

However, to estimate the impact of the change in PCE on the change in GDP, month over month changes expressed like that don’t help us much, since GDP is reported quarterly…thus we have to compare October’s and November’s real PCE to the the real PCE of the 3 months of the third quarter….while this report shows annualized chained dollar PCE for those three months monthly, we now need to access table 3 of the pdf for the revised 3rd quarter GDP report to find that the annualized real PCE for the 3rd quarter was represented by 16,113.0 billion in chained 2017 dollars….then, by averaging the annualized chained 2017 dollar PCE figures for October and November, 16,192.9 billion and 16,237.5 billion respectively, we get an equivalent annualized PCE for the two months of the 4th quarter data that we have so far….when we compare that average of 16 215.2 to the 3rd quarter’s real PCE representation of 16,113.0, we find that 4th quarter real PCE has grown at a 2.56% annual rate for the two months of the 4th quarter that are included in this report…(note the math we used to get that annual growth rate: [ (((16,192.9 + 16,237.5) / 2) / 16,113.0 ) ^ 4 = 1.025613 ] )…that’s a growth rate that would add 1.76 percentage points to the growth rate of 4th quarter GDP, in the unlikely event that December PCE doesn’t vary from the October – November average…

Retail Sales Rose 0.7% in November after Prior Months Sales were Revised Higher

Seasonally adjusted retail sales increased 0.7% in November after retail sales for September and October were revised higher…the Advance Retail Sales Report for November (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $724.6 billion during the month, which was 0.7 percent (±0.5 percent) higher than October’s revised sales of $719.7 billion and 3.8 percent (±0.5 percent) above the adjusted sales in November of last year.…year to date sales have now totaled $7,746.05 billion, 2.9% higher than the same 11 months of 2022…October’s seasonally adjusted sales were revised up by mote than 0.1% from the $718.9 billion reported last month to $703.7 billion, while September’s sales were revised less than 0.1% higher, from $716.0 billion to $716.4 billion; as a result, the September to October percent change was revised from up 0.4 percent (±0.5 percent)* to up 0.5 percent (±0.1 percent).…assuming a similar inflation adjustment to the one used in earlier estimates, the $0.4 billion upward revision to September’s sales​should ​have boost​ed the previous estimate of the personal consumption expenditures contribution to 3rd quarter GDP by about 0.02 or 0.03 percentage points….unadjusted sales, extrapolated from surveys of a small sampling of retailers, were estimated to have risen 0.9%, from $730,085 million in October to $736,535 million in November, while they were up 4.0% from the $708,181 million of sales in November a year ago…

Included below is the table of the monthly and yearly percentage changes in retail sales by business type taken from the November Census Marts pdf….the first pair of columns below gives us the seasonally adjusted percentage change in sales for each kind of business from the October revised figure to this month’s November “advance” report figure in the first sub-column, and then the year over year percentage sales change since last November in the 2nd column…the second double column pair below gives us the revision of the October advance estimates (now called “preliminary”) as of this report, with the new September to October percentage change under “Sep 2024 r” (revised) and the revised October 2023 to October 2024 percentage change in the last column shown…for your reference, the table of last month’s advance estimate of October sales, before this month’s revisions, is here.…(NB click on table for a better view)

To compute November’s real personal consumption of goods data for national accounts from this November retail sales report, the BEA ​w​ould initially use​ the corresponding price changes from the November consumer price index, which we reviewed last week.…to estimate what they will find, we’ll first separate out the volatile nominal sales of gasoline from the other totals…from the third line on this table, we can see that November retail sales excluding the 0.1% increase in sales at gas stations were also up by 0.7%….then, subtracting the dollar figures representing the 0.2% decrease in grocery & beverage sales and the 0.4% decrease in food services sales from retail sales ex gas stations figures, we find that core retail sales were up by more than 1.1% for the month…since the CPI report showed that the composite price index for all goods less food and energy goods was 0.3% higher in November, we can thus approximate that real retail sales excluding food and energy will show an increase of roughly 0.8%…however, the actual adjustment for each of the types of sales shown above will vary by the change in the related price index…for example, while sales at sporting goods, hobby, musical instrument, & book stores were up 0.9%, the recreational commodities price index was 0.5% lower, which would suggest that real sales at those stores rose by about 1.2%….similarly, while nominal sales at motor vehicle & parts dealers rose 2.6%, the price index for transportation commodities other than fuel was 0.9% higher, so we can figure real sales of motor vehicle & parts were up roughly 1.7%…….on the other hand, while nominal sales at clothing stores were 0.2% lower in November, the apparel price index was 0.2% higher, which would mean that real sales of clothing actually fell around 0.4%…

In addition to figuring those core retail sales, to make a complete estimate of real November PCE, we’ll need to adjust food and energy retail sales for their price changes separately, just as the BEA will do.…the CPI report showed that the food price index was 0.4% higher in November, with the index for food purchased for use at home rising 0.5% and prices for food bought for eating away from home averaging 0.4% higher… hence, with nominal sales at food and beverage stores 0.2% lower, that was in spite of 0.5% higher prices, suggesting real sales of food and beverages were roughly 0.7% lower in light of those 0.5% higher prices…similarly, the 0.4% decrease in nominal sales at bars and restaurants, once adjusted for 0.3% higher prices, suggests that real sales at bars and restaurants actually fell by about 0.7%…meanwhile, while nominal sales at gas stations were up 0.1%, there was a 0.6% increase in the retail price of gasoline, which would suggest real sales of gasoline were down on the order of 0.5%, with the caveat that gasoline stations do sell more than gasoline, and we haven’t accounted for those other sales in that figure….by appropriately weighing and adding the real sales changes that we have thus estimated back together, and excluding food services, we can estimate that the income and outlays report for November will show that real personal consumption of goods rose by almost 0.7% for the month, after falling by a revised 0.1% in October, but rising by a revised 1.0% in September, and being 0.4% lower in August and 1.0% higher in July…at the same time, the 0.7% decrease in real sales at bars and restaurants would subtract about 5 basis points from the growth rate of November’s real personal consumption of services…​(NB after the release of the inome and outlays report later in the week, we find that real personal consumption of goods rose by 0.7% in November, after falling by a revised 0.1% in October, but rising by a revised 1.​2% in September, and being 0.​5% lower in August and 1.0% higher in July​,,,there isn't anything obvious in this report that would have accounted for the August and September revisons)

Industrial Production Fell 0.1% in November After October Revised 0.2% Lower

The Fed’s G17 release on Industrial production and Capacity Utilization reported that industrial production fell 0.1% in November, after falling by a revised 0.4% in October, and by 0.5% in September, leaving it 0.9% below its year ago level….the total industrial production index, with the benchmark now set for average 2017 production to equal to 100.0, fell to 102.0 in November from 102.1 in October, which was revised from the 102.3 index reading reported for October of last month…at the same time, the September index remained at 102.5, the August index was revised up from 103.0 to 103.1, while the July index was unrevised at 102.5, and the June index remained at 103.3….

The manufacturing index, which accounts for about 77% of the total IP index, rose 0.2%, from 98.2 in October to 98.4 in November, led by a 3.5% increase in the output of motor vehicles and parts, while manufacturing of non-durable goods was 0.2% lower​, and ​overall manufacturing remained 1.0% below its year ago level…at the same time, the manufacturing index for October was revised from 98.5 to 98.2, and the manufacturing index for September was revised from 99.0 to 98.9…meanwhile, the mining index, which includes oil and gas well drilling, fell 0.9%, from 119.2 in October to 118.2 in November, after the October mining index was revised down from 118.2, which left the mining index 1.3% lower than it was a year earlier…finally, the utility index, which often fluctuates due to above or below normal temperatures, fell 1.3% in November, from a downwardly revised 107.1 in October to 105.6 in November, after the October utility index was revised up from 107.4 to 107.1, still leaving the utility index 1.0% higher than it was a year earlier..

This report also includes capacity utilization data, which is expressed as the percentage of our plant and equipment that was in use during the month, and which indicated that seasonally adjusted capacity utilization for total US industry fell to 76.8% in November from 77.0% in October…capacity utilization of NAICS durable goods production facilities rose from 73.3% in October to 73.6% in November as capacity utilization for motor vehicles and parts factories rose from 67.0% to 69.2%, while capacity utilization for non-durables manufacturers fell from 78.5% to 78.2%…at the same time, capacity utilization for the mining sector fell to 88.8% in November from 89.6% in October, while utilities were operating at 70.0% of capacity during November, down from their 71.2% of capacity during October…for more details on capacity utilization by type of manufacturer, see Table 7: Capacity Utilization: Manufacturing, Mining, and Utilities, which shows the historical capacity utilization figures for a dozen types of durable goods manufacturers, 8 classifications of non-durable manufacturers, mining, utilities, and capacity utilization for a handful of other special categories….

October Business Sales Flat, Business Inventories Rose 0.1%

After the release of the November retail sales report, the Census Bureau released the composite Manufacturing and Trade, Inventories and Sales report for October (pdf), which incorporates the revised October retail data from that November report and the earlier published October wholesale and factory data to give us a complete picture of the business contribution to the economy for the month….according to the Census Bureau, total manufacturer’s and trade sales were estimated to be valued at a seasonally adjusted $1,883.0 billion in October, virtually unchanged (±0.2 percent)* from September's revised sales, but​ 1.7 percent (±0.3 percent) higher than total October sales of a year earlier…note that total September sales were concurrently revised​ up from the originally reported $1,881.2 billion to $1,882.6 billion, but are still 0.3% higher than August…. seasonally adjusted manufacturer’s sales fell 0.2% to $585,376 million in October; retail trade sales, which exclude restaurant & bar sales from the revised October retail sales reported earlier, rose by 0.4% from September to $622,551 million, while wholesale sales fell 0.1% to $675,068 million…

Meanwhile, total manufacturer’s and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $2,587.0 billion at the end of October, up 0.1 percent (±0.1%)* from September, and 2.4 percent (±0.3 percent) higher than in October a year earlier…at the same time, the value of end of September inventories was revised from the $2,587.1 billion reported last month to $2,584.3 billion, now virtually unchanged from August…that $2.8 billion downward revision to September inventories decreased the previous estimate of the inventory component to 3rd quarter GDP at around at a $11.2 billion annual rate, which subtracted ​one-third of $1​8.3 billion in 2017 dollars, or 0.​1​1 percentage points from 3rd quarter GDP….seasonally adjusted inventories of manufacturers were estimated to be valued at $856,844 million at the end of October, a decrease of 0.1% from September, while inventories of retailers were valued at $825,120 million, 0.2% more than September, and inventories of wholesalers were estimated to be valued at $905,023 million at the end of October, also 0.2% morel than in September…

For GDP purposes, all inventories, including retail, will be adjusted for inflation with appropriate component price indices of the producer price index for October, which averaged 0.1% higher for finished goods….two weeks ago, we looked at real factory inventories with price adjustments for goods at various stages of production, and judged those real inventories would be down slightly, following a small third quarter increase, and would thus subtract modestly from the growth rate of 4th quarter GDP……then last week, we found that real wholesale inventories, also slightly lower in October, would reverse the 3rd quarter increase and also subtract the October real decrease from the growth rate of 4th quarter GDP….since the nominal value of retail inventories for October has now been shown to be 0.2% higher, real retail inventories for the month, after the 0.1% finished goods price adjustment, thus would have thus increased by only around 0.1% from September, after a real increase in inventories at a $57.5 billion annual rate in 2017 dollars in the third quarter…therefore, any real retail inventory increase over the 4th quarter would have to top that to have a positive impact on fourth quarter GDP….hence, as of October, all three categories of business inventories are negatives for 4th quarter GDP…

Housing Starts Reported Lower in November; New Building Permits Were 6.1% Higher

The November report on New Residential Construction (pdf) from the Census Bureau estimated that construction of new housing was being started at a seasonally adjusted annual rate of 1,289,000 units during the month, which was 1.8 percent (±10.6 percent)* below the revised October estimated annual rate of 1,312,000 housing unit starts, and was 14.6 percent (±11.7 percent) below last November's rate of 1,510,000 housing starts a year....the asterisk indicates that the Census does not have sufficient data to determine whether housing starts actually rose or fell from October, with the figures in parenthesis the most likely range of the change indicated; in other words, November housing starts could have been up by 8.8% or down by as much as 12.4% from those of October, with even larger revisions possible...in this report, the annual rate for October housing starts was revised from the 1,311,000 units reported last month to 1,312,000, while September starts, which were first reported at a 1,353,000 annual rate, were revised from last month's initial revised figure of 1,353,000 up to a 1,355,000 rate with this report....

Those annual rates of ​housing starts reported here were extrapolated from a survey of a small percentage of US building permit offices visited by canvassing Census field agents, which estimated that 98,000 housing units were started in November, down from the 111,800 units that were started in October...of those housing units started in November, an estimated 75,800 were single family homes and 21,100 were units in structures with more than 5 units, down from last month's revised 79,800 single family starts, and down from the 30,800 units started in structures with more than 5 units in October...

The monthly data on new building permits, with a smaller margin of error, are probably a better monthly indicator of new housing construction trends than the volatile and often revised housing starts data...in November, Census estimated new building permits were being issued at a seasonally adjusted rate of 1,505,000 housing units annually, which was 6.1 percent above the revised October annual rate of 1,419,000 permits, but was 0.2 percent below the rate of building permit issuance in November a year earlier...the annual rate for housing permits issued in October was revised up from the 1,416,000 that was originally reported....

Again, the annualized estimates for new permits reported here were extrapolated from the unadjusted estimates collected monthly by canvassing census agents, which showed that permits for 108,400 housing units were issued in November, down from the revised estimate of 125,100 new permits issued in October...the November permits included 66,400 permits for single family homes, down from 84,400 single family permits issued in October, and 38,100 permits for housing units in apartment buildings with 5 or more units, up from 15,800 such multifamily permits a month earlier...

For detailed graphs and commentary on this report, see the following two posts by Bill McBride at Calculated Risk: Housing Starts Decreased to 1.289 million Annual Rate in November and the identically titled Housing Starts Decreased to 1.289 million Annual Rate in November, which links to and excerpts from his detailed housing newsletter article with the same title…

Existing Home Sales Rose 4.8% in November on Higher Prices

The National Association of Realtors (NAR) reported that their seasonally adjusted extrapolation of existing home sales rose 4.8% from October to November, projecting that 4.15 million existing homes would sell over an entire year if the November home sales pace were extrapolated over that year, a pace that was also 6.1% above the annual sales rate they projected for November of a year ago….October home sales were at a 3.96 million annual rate, revised but unchanged from the annual rate indicated by last month’s report…the NAR also reported that the median sales price for all existing-home types was $406,100 in November, up 4.7% from the median sales price reported for November of last year, which they report is “the 17th consecutive month of year-over-year price increases.”…..

The NAR press release, which is titled “Existing-Home Sales Elevated 4.8% in November; Post Strongest Year-Over-Year Increase Since June 2021“, is in easy to read plain English, so if you’re interested in the details on housing inventories, cash sales, distressed sales, first time home buyers, etc., you can easily find all of that info in that press release…for both seasonally adjusted and unadjusted graphs and commentary on this report, see the following posts from Bill McBride at Calculated Risk: NAR: Existing-Home Sales Increased to 4.15 million SAAR in November and Newsletter: Existing-Home Sales Increased to 4.15 million SAAR in November, which in turn links to his in-depth article in his real estate newsletter…Since sales of existing properties do not add to our national output, neither these home sales nor the prices for which these homes sell are included in GDP, except insofar as real estate, local government and banking services are rendered during the selling process…

 

 

(the above is the synopsis that accompanied my regular sunday morning news links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most of which are picked from the aforementioned GGO posts, contact me…)