Q3 GDP not so bad

The bad news today was confirmation that real GDP for Q3 was in fact negative, but it actually was not so bad. Forecasts were for something like a -0.5% or -0.6% contraction (mine was 0.0%), but the headline number came in at -0.3%. The really good news is that nominal GDP was in fact reasonably positive. Although the price of oil and gasoline fell rapidly later in the quarter, the sharp gains early in the quarter led to a GDP deflator of 4.2%, compared to 1.1% in Q2. Nominal GDP, the actual numbers people see when buying and selling goods and services, was actually up +3.8%, compared to +4.1% in Q2 and +3.5% in Q1. Subtracting 4.2% (rounded) from +3.8% (rounded) led to the -0.3% (rounded) decline in real GDP.

-- Jack Krupansky