This morning’s 3Q advance real GDP number showed a growth of 3.9%, as against a consensus estimate of 3.4%. This robust performance is entirely attributable to an astoundingly low increase in the GDP deflator , 0.8%, as against expectations of 2% and an average for the last 4 years of 3%. The consensus for nominal GDP was 5.1% and the actual nominal number was 4.7%, below consensus.

Presumably this reflects weakness in the housing markets and “owner’s equivalent rent”, a made-up number which dominates this price index. So I would regard this as a very dubious number. If the GDP deflator had been at its recent average, GDP would have been plus 1% or so, and 2% or so if it were at consensus. Mean reversion is to be expected next quarter, which may well mean a negative number. Or maybe this outlier will be revised away.