Not That Easy

Dean Baker claims that it would be impossible for markets to be surprised by the September consumption number:

"Those of us who passed third grade arithmetic would look at the number reported for third quarter consumption, then subtract out the numbers on monthly consumption that the Commerce Department had already released for July and August, and voila, we would know what number the Commerce Department was going to release for September consumption."

But that first of all assumes that every analyst in the market is fully rational, something which I wouldn't bet on.

And secondly and more importantly, while you can get a hint of how the number likely developed in approximate terms by doing so, it is not true that you can infer the exact number that way. All that was known was the third quarter number, not the monthly break down. Because previously reported monthly numbers are often revised, you cannot infer with certainty the exact monthly number for September using Baker's methodology. Baker's methodology would have been able to do so only if no revisions occurred, but in reality numbers are usually revised at least somewhat.

And since August PCE was upwardly revised by $10 billion, anyone trying to infer the September number from the quarterly number and previously reported July and August numbers would have indeed been disappointed by the September number. The absolute level was a result $10 billion lower and the monthly change was $20 billion weaker than what would have been inferred using Baker's methodology.