Daily Dose of Good News: GDP Grew at 3.2% Annual Rate
MarketWatch reports that GDP rises at 3.2% annual pace, strongest in more than two years, which is a nice bit of good news about the economy after so much negativity in the Presidential election.
Consumer spending rose 2.8% in the quarter, stronger than the original estimate of 2.1% and the strongest pace since 2002. Another big contribution to the economy was business investment in structures like offices and factories, which expanded at a 10.1% pace, faster than the initial estimate of a 5.4% clip.
Soybeans came to the rescue helping exports clock a 10.1% gain, and corporate profits grew a healthy 6.6%.
GDP measures total spending in the economy, which is a decent economic barometer when left to its own devices; however, when policymakers artificially "boost" GDP by borrowing and spending other peoples money, the measure becomes less meaningful. Still, recent measures point to a reasonably healthy economy that is still nowhere near recession. Things can change fast, but right now things are OK.
What are your thoughts?
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Rob Viglione is a PhD Candidate in Finance @UofSC with research interests in cryptofinance, asset pricing, and innovation. He is a former physicist, mercenary mathematician, and military officer with experience in satellite radar, space launch vehicles, and combat support intelligence. Currently a Principal at Key Force Consulting, LLC, a start-up consulting group in North Carolina, and Head of U.S. & Canada Ambassadors @BlockPay, Rob holds an MBA in Finance & Marketing and the PMP certification. He is a passionate libertarian who advocates peace, freedom, and respect for individual life.
Too much noise in the inputs to the GDP equation combined with changing equations make comparison of GDP from year to year next to meaningless.
Absolutely. GDP is a rough gauge subject to both manipulation and measurement error...i'll never take the point estimate to heart, but happy when it's growing, everything else equal.
OK at best. We're in the midst of another bubble(S?) and when it pops it will be even uglier. In the meantime, overall participation rates are still at 40-year lows and youth participation is at all-time low, most races still haven't recovered from 2008
Definitely agree that there are some big imbalances that are likely contributing to underlying risk, and any of those can manifest into recession, asset bubble corrections, renewed surge of unemployment, etc. For the time being, however, the juggernaut continues to roll forward...
I know. And with null interest rates it will inflate even further.
true, the long run effects of ZIRP could very well be a mess.
"could"? Never find the fake objectivity; now it's not a question of if, but WHEN. The Fed more than quadrupled the monetary base since 2008, and ZIRP just encouraged careless spending rather than savings, the true motor of economic growth
I share disdain for the policy hubris, just moderate my own forecasts because so much else is going on in the world/economy; bad policies surely make us poorer than we'd otherwise be, but it's entirely possible the bad policies never cause catastrophe. Econ policies have oscillated between horrifying to bad for all of human history, and yet we keep getting richer as a civilization. Tail risks grow with bad policy, but def don't become certainties because of the billions of other people working, creating value, innovating, and offsetting the bad.
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