High on Hopium

Q3 GDP came in at 2.5%; best performance since Q4 ’10. But, after looking at the economic entrails the number is weaker than it looks. Consumer spending on utilities and healthcare is what drove spending, not discretionary items. Worse, spending rose only because savings rates fell from 5% to 4%. Savings is falling because personal disposable income fell 1.7% in Q3; a huge decline. I bet the GDP number will be revised down.

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