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Shah Gilani

Sit down before you read this.

It’s going to make your head spin and, worse, change the way you think about what’s real in America.

Christmas came early this year, for the market that is, by way of a gift from the U.S. Bureau of Economic Analysis.

However, this branch of the U.S. Department of Commerce didn’t put its gift under anybody’s tree. They put it over all of us.

The gift was headline news that the third revision of the third-quarter gross domestic product (GDP) number showed the U.S. economy grew at a whopping 5% annualized rate, not the 3.9% rate posted in the second revision.

That sounds like good news, right?

Well, here’s what’s scary

The Bureau of Economic Analysis Is the Bad Santa

Ho! Ho! Ho! said the stock market. Good news is now good news on top of bad news being good news for stocks.

And so, with just enough time before Christmas for the stock markets to react, we got a 5% print from the BEA, which pushed the Dow Jones Industrial Average above 18,000 while the S&P 500 made yet another all-time high.

Too bad the BEA is lying. The latest revision was a put-on. The folks at the BEA put it over on all of us.

What they did to get to that 5% number to make us all feel gifted by a robustly recovering economy, to get us to go out and spend spend spend, to get stocks to soar was pure prestidigitation. It was pure legerdemain.

It was pure BS.

SPECIAL: How All This BS Can Give You Potential 1,048% Gain In a Single Day

I’ll prove it to you. Here’s what the BEA posted on its own website:

The GDP estimate released today is based on more complete source data than were available for the ‘second’ estimate issued last month. In the second estimate, the increase in real GDP was 3.9 percent. With the third estimate for the third quarter, both personal consumption expenditures (PCE) and nonresidential fixed investment increased more than previously estimated (see ‘Revisions’ on page 3).

The increase in real GDP in the third quarter primarily reflected positive contributions from PCE, nonresidential fixed investment, federal government spending, exports, state and local government spending, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, decreased.

The acceleration in the percent change in real GDP reflected a downturn in imports, an upturn in federal government spending, and an acceleration in PCE that were partly offset by a downturn in private inventory investment and decelerations in exports, in state and local government spending, in residential fixed investment, and in nonresidential fixed investment.

In the second paragraph, the BEA says the increase primarily reflected positive contributions from PCE, nonresidential fixed investment, federal government spending, exports, state and local government spending, and residential fixed investment. Then in the very next paragraph, it says that an upturn in federal government spending, and an acceleration in PCE that were partly offset by a downturn in private inventory investment and decelerations in exports, in state and local government spending, in residential fixed investment, and in nonresidential fixed investment.

What?

How can you have an increase in PCE and the other stuff that was partly offset by a downturn in the same stuff the BEA said had increased?

I’ll tell you what’s going on.