US GDP revised up "mystery"? Commerce Department increases national savings by 500 billion in a month

The Bureau of Economic Analysis (BEA) of the U.S. Department of Commerce released the final GDP figure for the second quarter of this year this Thursday, and also revised the GDP figures from the second quarter of 2020 to 2023. However, except for the second half of 2023, the revised values for other periods did not increase significantly compared to previous estimates. Earlier warnings from banks like Goldman Sachs suggested a significant downward revision of past GDP data.

Why is there such a big difference between Goldman Sachs' forecast and the actual results announced by BEA? Financial blog Zerohoedge believes that the U.S. personal income and spending data released this Friday can explain why Goldman Sachs' downward revision speculation was wrong. The unexpected "boost" in U.S. economic growth is due to Secretary of Commerce Raimondo's decision to significantly revise the two most important data sets supporting the U.S. economy: personal income and personal spending. A month ago, Raimondo had told the media that she was not familiar with the Bureau of Labor Statistics (BLS), the department that announced a significant downward revision of 818,000 jobs in the year ending March this year.

So, how did the U.S. Department of Commerce adjust the data? Firstly, as shown in the figure below, personal income was unexpectedly raised by about $800 billion, not only due to what the U.S. government considers an increase in interest and dividend income, but also as a result of increased government subsidies, with personal current transfer receipts (PCTR) increasing by over $200 billion, and wages and salaries cumulatively increasing by $293 billion. Overall, personal disposable income was revised up from just under $21 trillion on an annualized basis to $21.8 trillion.

Spending data was also revised upwards, but to a lesser extent: personal spending in August was revised up by about $350 billion, from $20.38 trillion in July to $20.73 trillion, reflecting a decrease in goods spending offset by a significant increase in service spending.

In summary, post-tax personal disposable income was raised by 3.8% to $21.8 trillion, while the increase in personal spending was less than half of the income adjustment, up by 1.7% to $20.7 trillion.

Zeohedge stated that because the difference between personal income and spending is also known as savings, we can finally understand why the U.S. economy miraculously grew over the past few years instead of further shrinking: when certain officials at the U.S. Department of Commerce BEA recently decided to click the mouse button, perhaps in response to the significant downward revision of job positions for political reasons, They made the American people suddenly richer, even if only in the electronic spreadsheets of the Department of Commerce.

Therefore, the results presented by the Department of Commerce show that, after data revision, the corrected personal savings of the American people nearly doubled, from $600 billion in July to $1.1 trillion in August, with everyone's savings increasing by $500 billion in just one month.

Ultimately, after the adjustment, the personal savings rate in the United States was also raised.

Zeohedge believes that this adjustment is significant because just last month, the announcement of personal income and expenditure raised red flags, warning that consumers' financial health was approaching historically low levels. With this revision, the assumed trends in income, expenditure, and savings in the post-pandemic period make consumers' situation appear much healthier than last month.

Why is this important? Because consumers' credit card balances have reached record levels, and various estimates by the Federal Reserve show that all the excess savings consumers received during the pandemic have been exhausted. In this situation, if personal savings were to fall to historically low levels, economists believe it would be the final straw that would crush consumers. In other words, the United States is just a step away from the narrative of a self-reinforcing consumer-driven recession.

Zeohedge sarcastically remarks that now, the timely correction by the Department of Commerce in the United States conveniently masks the rapidly escalating recession narrative. It can temporarily show that American consumers and households are quite healthy, even if only for a few months, lasting until the election, even if this healthy state is merely the result of a mouse click modification.