In the second estimate of Q2 2018 GDP, upward revisions to nonresidential fixed investment and private inventories were balanced by downward revisions to consumer and government spending, leaving GDP unchanged at +3.5% for the quarter. The deceleration from Q2’s +4.2% growth rate was the result of drops in exports, nonresidential fixed investments, and consumer spending, and an increase in imports, which was partially offset by an increase in private inventory investment. The first estimate of unadjusted corporate profits for Q3 was up +5.9% Y/Y to a seasonally adjusted annual rate of $1.975 trillion, with adjustments for inventory valuation and capital consumption raising the increase to +10.3% and $2.318 trillion. Adjusting for a -32.9% drop in corporate taxes brought yearly Q3 adjusted after-tax profits to a +19.4% yearly gain of $2.074 trillion.

New home sales reached a three year low as they dropped -8.9% in October to a seasonally adjusted annual rate of 544,000, down -12.0% from October 2017. Compared to September, the median sales price dropped from $320,000 to $309,000, the average sales price increased from $377,200 to $395,000, and sale inventory increased from 327,000 (7.1 months) to 336,000 (7.4 months). Sales dropped in all regions, with the steepest drops in the Midwest (-22.1%) and Northeast (-18.5%), and sale prices skewed downward, with 14% of homes priced under $200,000 (vs 7% in September), and 30% of homes priced above $400,000 (vs 33% in September).

September’s consumer spending growth was revised downward from +0.4% to +0.2%, but grew at the fastest rate in 7 months in October at +0.6%. Payments to farmers from the Department of Agriculture’s Market Facilitation Program contributed to an increase in proprietors income from -$13.1 billion to $25.2 billion, which helped push personal income up +0.5%, bringing inflation and tax adjusted income up +0.3% for the month. Overall prices rose +0.2% for the month, with core prices, which exclude food and energy, only up +0.1%. Yearly inflation remained steady at +2.0%, core inflation dropped by -0.1% to +1.8%, and the personal savings rate continued to drop, reaching a 10-month low of 6.2%.