Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
By the time the third GDP revision comes out it is old news but since people use this number as an indicator of “health” of the economy, it is worth noting today’s >3% print. (3.1% versus last revision of 2.7%) This is the first such number >3% since Q4 2011. However it has some caveats namely inventory adjustments and a huge spend by the federal government in defense. Together they make 1.5% of the number and obviously those are not things that continue quarter to quarter. Housing also helped as did a “downturn in imports”. Personal consumption came in at 1.6% versus 1.4% so a small uptick there, which is welcomed in an economy where 70% of the economy is consumer spending. So more realistically this is another 2%ish “meh” type of GDP figure we’ve become very accustomed too, despite running $1.1-$1.4T deficits year after year. Full report here.
The acceleration in real GDP in the third quarter primarily reflected upturns in private inventory investment and in federal government spending, a downturn in imports, an upturn in state and local government spending, and an acceleration in residential fixed investment that were partly offset by a downturn in nonresidential fixed investment and a deceleration in exports.
As for markets we remain hostage to these politicians for now. The next few closes should be interesting – can the major indexes hold above their breakout levels and over early November highs or was this the second “Lucy pulling the football away from Charlie Brown” in a row? Keep in mind the rally earlier this week originated on a gap up hence produced an unfilled gap which at some point will need to be filled.
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