Dear Commons Community,
Bloomberg News reported yesterday that the U.S. economy grew at an even faster pace in the third quarter than originally estimated, reflecting upward revisions to business investment and government spending.
Gross domestic product rose at an upwardly revised 5.2% annualized pace in the third quarter, the fastest in nearly two years. Consumer spending advanced at a less-robust 3.6% rate, according to the government’s second estimate of the figures issued Wednesday.
The downward revision to household outlays reflected slower growth in services spending. After a previously reported decline, business investment was revised up to a gain on the back of firmer outlays for structures. Housing was also stronger than initially reported.
The government’s other main gauge of economic activity — gross domestic income — rose a more moderate 1.5%. GDI is a measure of the income generated and costs incurred from producing goods and services.
The average of the two growth measures was 3.3%, more than double the average pace of the first half of the year.
Even with the downward revision, consumer spending remained robust, underpinned by a resilient jobs market and a flurry of travel and events. That momentum does appear to be cooling into year-end, though it’s far from crumbling.
While data out later today is anticipated to show inflation-adjusted outlays rose just 0.1% last month, the start of the holiday shopping season was mixed. U.S. shoppers spent a record $12.4 billion on Cyber Monday, up 9.6% from a year ago, though Black Friday sales disappointed.
The Federal Reserve’s preferred inflation metric — the personal consumption expenditures price index — was revised down to a 2.8% annual rate in the third quarter. Excluding food and energy, the gauge was also marked lower to 2.3%.
The report also showed that adjusted pretax corporate profits posted the biggest increase in more than a year. The gain was fueled primarily by the non-financial sectors, though profits also picked up at financial firms.
After-tax profits as a share of gross value added for non-financial corporations, a measure of aggregate profit margins, picked up to 14.9%.
Separate data Wednesday showed the U.S. merchandise-trade deficit widened to a three-month high in October.
Black Friday sales signal tough holidays for US retailers
For retailers and brands that rely on Black Friday the most, the day was a dud.
That’s a troubling sign for these chains and a U.S. economy that needs consumers to keep upping their spending to avoid a recession. It also increases the risk that the remainder of the holiday shopping season will be disappointing, forcing retailers to offer more discounts to catch up.
The median decline in Black Friday sales was 4% for a group of 40 companies that generate a higher percentage of year-to-date sales from the shopping holiday than their peers, according to an analysis of Bloomberg Second Measure transaction data. That was a steeper drop than 2022.
Bloomberg looked at retailers where Black Friday made up a disproportionate share of observed sales, spanning big-box stores such as Walmart Inc. and home improvement giant Home Depot Inc. to clothing chains Abercrombie & Fitch Co. and Gap Inc. Data from Bloomberg Second Measure is based on a sample of millions of U.S. credit and debit card users and doesn’t track wholesale channels, which are significant for companies like cosmetics maker Estée Lauder Cos., and some other forms of payment, including cash.
Black Friday represented more than five times an average day’s worth of observed U.S. direct-to-consumer sales to date, according to the median estimate for the group. That’s the highest level since 2019, meaning these retailers are relying more on this one shopping day even as the number of bargain hunters they’re attracting dwindled.
To be sure, Adobe Analytics said that Black Friday spending online was up by 7.5% compared to last year. This might indicate that consumers are shifting some of their spending from the traditional Black Friday retailers that Bloomberg analyzed to discount retailers or more experiences and travel purchases.
That may also explain one of the few bright spots in the Bloomberg Second Measure data, which showed rising sales for discounters such as Walmart and TJX Cos Inc, the parent company of T.J. Maxx and Marshalls. Even Amazon.com Inc., which tends to generate more spending in the immediate run-up to the Christmas holiday, boosted its Black Friday haul by 12%.
Economy not doing too bad!