Did 3Q GDP disappoint?

It's hard to say that a 2.6% GDP for 3Q 2010 is disappointing considering you're coming off a 1.7% 2Q 2010 and, by most accounts, the 4Q data appears to reflect a continued increase in economic activity from 3Q. But here is some less than good data to consider -- but remember, its now old data from a quarter that ended in Sept.

(1) consumer spending ("personal consumption") was revised down from the previous estimate from 2.8% to 2.4%. We all know consumer spending is key to US health for better or worse.

(2) deflation and the Fed's quantitative easing plans got a little justification as prices were revised down from 2.3% increase to only 2.1% increase, the lowest in 50 years. Interesting and surprising by most accounts

(3) Corporate profits were revised down from 3.2% increase to 2.4% - although small gains in top line revenue growth are likely to continue to result in large bottom line profit impacts considering employment will stay muted and corporations are as lean as ever nowadays.

(4) Final sales (another reflection of consumer demand) was revised down from 1.2% to 0.9%.

(5) Inventory building did present a strong increase to help support the GDP growth figures and suggest hope of continued business sale expansion.

All in all, 2.6% lives in that world of uncertain but hopeful growth. Less than 2% indicating potential deflation and serious concerns, while near 4% growth is the goal.