The Mystery Of Surging Q3 GDP Explained And Why Americans Are Suddenly $80 Billion "Poorer"

The final major datapoint of the day was the Consumer Income and Spending data from the US Dept of Commerce's Bureau of Economic Analysis, the same outfit that yesterday shocked everyone with just how much better US GDP was. Well, today, we learned just where the offset came from. Because while on the surface, both income (+0.2%) and spending (+0.2%) missed expectations of a 0.4% and 0.3%, respectively...

... it was the revised data that the US department of data fudging once again showed why it has long since surpassed China.
Behold what is perhaps the most important data series in all of US eco: Disposable Personal Income. We say behold, because there are some rather massive variations between what the BEA reported a month ago, and what it reported today, as relates to all the data issued since March. To wit:

Essentially, the just reported Disposable Persona; Income print of $13.109 trillion as of the end of October, is where according to the old, unrevised data US houshold income was some time in August. Whatever happened to two months of income?
Which brings us to the other all important number: the personal savings rate. At just reported at 5.0%...

... something strucks us: this number was reported at 5.6% last month.
And sure enough, since Disposable Personal Income flows into personal savings, net of outlays, it was clear that American savings would be dramatically impacted as a result of the massive data revision.
Sure enough, this is how the US personal savings rate looked like based on the old and just revised data.


And, the punchline: US savings in absolute terms, an $80 billion decline in savings from the old September print and the latest, post-revision, number of just over $650 billion.

So there you have it: in order to "suggest" that the US economy had grown by a far greater than expected run-rate, the BEA was forced to revise away personal income, and "assume" these had instead been invested in the US economy, in the form of a surge of durable goods purchases. Sure enough, while both incomes and savings tumbled, spending magically surged:

So if that "statistical" amount of money you thought you had saved in the BEA's savings.xls spreadsheet just dropped by 10%, fear not dear Americans: it was all used for a good cause: to fabricate a much stronger than expected Q3 GDP number.
Source: BEA