by Calculated Risk on 10/30/2008 03:12:00 PM

Just a quick note: Real Personal Consumption Expenditures (PCE) declined 3.1% (annualized) in Q3 according to the BEA Q3 Advance GDP report. This was the first decline since 1992, and real PCE was less in Q3 2008 than in Q3 2007!

This also suggests that spending declined sharply in September (or that earlier months were revised down).

My "two month" estimate for PCE in Q3 was -2.4%, and two Fed researchers proposed another method that forecast PCE of -2.3%.

Either way, the quarterly decline of -3.1% suggests that the decline in consumer spending was even worse in September than for July and August, and assuming no downward revision for the previous months, this indicates a decline of -4.4% (annual rate) for September compared to June.

Note: when comparing months, the headline number will be to the previous month (August in this case), but the better comparison - for comparing to the quarterly data - is to compare to the monthly data of the same month of the previous quarter (third month in Q2 or June).

The BEA will release the numbers for September tomorrow morning, and they will probably be ugly.