The good folks over at Calculated Risk put up a great post about Bureau of Economic Analysis’ (BEA) release on Monday of their Personal Income and Outlays report – the panic roiling the nation on Monday no doubt buried this interesting information.

[As an aside, several emails have come in over the past week or so asking if we ascribe to the views that Calculated Risk (CR) articulates on housing.  That’s a pretty broad query, and shooting from the hip, we’d probably offer that CR typical offers very factually grounded analysis on most issues related to housing.  We do not agree with the weight that the CR team appears to assign to Case-Shiller Index data in terms of looking at housing nationally.] 

You need to read the full post here, but the focus on Personal Consumption Expenditures (PCE) is most enlightening.  The post explains how it is possible to estimate the PCE today for the third quarter of 2008 as September’s data won’t be available until the end of October. 

Here’s the kicker – the current data incorporated into an estimate for third quarter 2008 suggests that real PCE will decline by something close to 2.4% (annualized); see the graph above.  PCE accounts for roughly 71% of GDP – therefore this is some of the hardest evidence yet that real GDP for third quarter might indeed be negative.  If the projections hold, it would be the first decline in PCE since the fourth quarter of 1991.  Consumer spending might be running out of gas…..

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