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Tuesday
Nov222011

Revised GDP Figures No Holiday Cheer for Retailers

Comstock Images/Thinkstock(NEW YORK) -- Retailers are bracing for a tepid holiday sales season after the Commerce Department revised third-quarter GDP figures downward to 2 percent on Tuesday.

The Bureau of Economic Analysis had previously estimated that the economy grew at 2.5 percent for the quarter ended Sept. 31.  The updated figure is based on a more complete source data, the bureau said. In the second quarter, real GDP increased 1.3 percent.

Guy LeBas, chief fixed income strategist with Janney Capital Markets, said the source of the downward revision in the third quarter was reduced inventory growth. LeBas said one driver of the fall in inventory was lower commodity prices in the third quarter. For example, lower oil prices lead to oil inventories that are worth less.

The other issue is that companies are stocking up less.

“Retailers are little cautious about the holiday season so they are less willing to stock up if they have a less good idea of sales,” he said. “From our perspective we think the holiday season is going to be better than what are rather dismal predictions. So we’ll have another good, not great, holiday.”

Growth in the third quarter also reflected increases in personal consumption and in non-residential fixed investment, and a smaller decrease in state and local government spending, the Commerce Department said. Imports decreased and exports accelerated, partly offset by a larger decrease in private inventory investment.

Copyright 2011 ABC News Radio

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