US Q4 GDP tracking 2.4% after October CPI

The elements of the CPI that used to deflate core retail sales in tracking of real PCE growth were a touch weaker than expected in October. Economists estimate that the PCE control group deflator, largely an aggregation of durable and nondurable goods prices, fell 0.1% m/m in October (previous: +0.2% m/m).

This morning's data confirm our suspicion that some of the weakness in nominal October core retail sales was indeed price-related. Lower prices imply slightly stronger consumption in real terms.

"The data boosted our tracking estimate of Q4 real PCE growth one-tenth to 2.9%, but kept our Q4 GDP tracking estimate unchanged at 2.4% after rounding", says Barclays.