US real GDP growth for 3Q15 revised up to 2.1% on much stronger inventories

The government's estimate of 3Q15 real GDP growth was revised up to 2.1% saar (from 1.5%). But, as expected, an upward revision to inventory accumulation to $90 billion saar (from $57 billion) accounted for the entire GDP revision. The government revised down final sales growth modestly to 2.7% (from 3.0%) and domestic final sales growth slightly to 2.8% (from 2.9%). 

The 4Q15 real GDP growth forecast lowered to 2.0% (from 2.5%) and some downside risk remains. The revision mainly reflects the unexpectedly weak October report on consumer spending. Real consumer spending increased only 0.1% in October and there were downward revisions to spending in September (now 0.1%) and August (now 0.3%). Accordingly the forecast for 4Q15 real consumer spending growth lowered to 2.3% (from 3.0%). The forecast for 2.25% real GDP growth during 2016 still holds.

The upcoming calendar includes important early information on November activity, including the labor market report. A 175,000 increase is expected in payroll employment and the unemployment rate is likley to hold at 5.0%. The economic calendar also includes October construction spending, pending home sales, and the final foreign trade report and November auto sales and the ISM surveys. In addition, Janet Yellen will speak to the Economic Club of Washington on Wednesday and deliver Congressional testimony on Thursday.