GDP Growth Looking Good. Next week, government statisticians will release the first estimate of third-quarter real GDP growth. In spite of hurricanes, and continued negativity by conventional wisdom, we expect 2.8% growth.
Just Another Overly Cautious Perspective. If you’re wondering why that’s the headline, take a look at the post today (10/9/2017) titled “Longest Recovery Ever, Almost” (Monday Morning Outlook From First Trust), and you’ll see a totally opposite point of view from what follows. Differing opinions come out every day, but it’s interesting that these two showed up on the same day.
Longest Recovery Ever, Almost. Notice how we didn’t say it’ll be the “best” expansion of all-time, just the longest; it’s not the best by a long shot. From the recession bottom to the expansion peak, real GDP expanded 39% in the 1980s and 43% in the 1990s. So far, eight years in, this one is only up 19%. That’s why we’ve been calling it the Plow Horse Economy.
Will it Happen This Time? The “Dow Theory” is that a new high by one of the indexes, traditionally the Dow Industrials, is considered very bullish if confirmed by the Dow Transports, and even more bullish if the third (the Dow Utilities) joins in.
Stocks Won. Next Monday (October 9th) will be exactly ten years from the stock market peak before the Financial Panic of 2008.
Low Inflation is No “Mystery”. By claiming that low inflation is a “mystery” the Fed is admitting it doesn’t understand the mechanics of QE. Yet, it is perfectly willing to allow people to think QE is what saved the economy. This is teaching an entire generation of young people, who in many cases don’t study economic history, that growth requires government intervention. The only “mystery” is why they would allow this to happen.