The Daily Difference: Flash special!

Happy Holidays! We had an upward revision in Q3 GDP. GDP growth, initially estimated to be 2.8% (annualized) in Q3, was upwardly revised to 3.6%. At first glance, this number is very encouraging; however, the majority of the growth came from a buildup in inventories…… NOT sales. In fact, inventories grew at the fastest pace since Q1 1998. The sustainability of this growth rate will be dependent on spending (consumers quickly buying the large stockpiles on shelves); unfortunately, retail numbers over the past week indicate demand may be insufficient to soak up the large supply of inventory. Final sales (which exclude inventories) only increased 1.9%, indicating companies have larger than anticipated inventories that will need to be liquidated, likely putting downward pressure on purchases in coming quarters.