Economic data

Q2 GDP was left unchanged at -1% vs expectations of a fall to -1.5%. Personal Consumption was revised to a drop of 1% from -1.2% and vs an expected fall of 1.3%. Government spending was revised higher to a rise of 6.4% from 5.6%. Also helping was an upward revision to Exports. Offsetting this was a downward revision to inventories and also investment, led by commercial real estate. Interestingly, the residential construction decline was revised to down 22.8% from -29.3%. Real final sales which takes out the impact of inventories, was revised up by .6% to +.4%, the first positive figure since Q2 ’08. Also giving a lift to the overall revision relative to expectations was a change in the price deflator to flat from up .2%. Back in July, expectations for the deflator was 1% so with the figure now flat, REAL GDP was helped out by 1% point due to a change in this inflation measurement vs the consensus.

Initial Jobless Claims totaled 570k, 5k more than expected and the prior week was revised up by 4k to 580k. Continuing Claims though fell by 119k and were 109k below the consensus and at the lowest level since April but those receiving Emergency Unemployment Compensation, which includes those that have exhausted the 26 weeks of benefits and is measured in continuing claims, continues to rise as 38k were added and 64k started receiving extended benefits which comes after the EUC ends. While some are finding new jobs (which of course is good) and falling off the continuing claims rolls, many are still seeing their benefits exhausted and thus are falling into other categories. The insured unemployment rate did fall .1% to 4.6%. The Labor market is definitely improved relative to the past few quarters but the level of claims above 550k still remains at a level that is consistent with monthly job losses of 200-400k in the aggregate.

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