Fed upgrades Q3 GDP, but the devil is in the details

VIDEO1:0501:05
Pisani: Fed building US economy

Yesterday, the Fed upgraded its outlook for the U.S. economy and said it could hike rates sooner, depending on how closely the economic data improves.

That's why everyone was watching today's first look at Q3 GDP. The headline number was stronger than expected at 3.5 percent. But below the hood, business and real estate investment and personal consumption dropped.

Read MoreUSshows torrid growth, boosted by defense, trade

If the consumer, business investment and housing were weaker, where was the strength? Government spending was stronger than expected, due largely to national defense expenditures.

The bottom line: third quarter growth was stronger than expected, but the composition of the growth wasn't what we were be hoping for. The Fed, I would think, wants to see a broader participation in the economic recovery. You want to see more contribution from personal spending and business in the economy.