US Economy Evinces No Recession Inclinations
The US economy expanded at a blistering 4.9% annual rate last quarter, according to the advance read on Q3 GDP released Thursday.
That was markedly ahead of consensus, which is saying something in this case: Economists expected 4.5% by the time the BEA released the figures. That would've easily counted as a gangbuster print. But thanks to the insatiable American consumer, the world's largest economy logged an even brisker pace of growth.
The range of estimates, from nearly six-dozen economists
So, higher interest rates are fueling spending and stoking inflation… Makes sense. We saw something similar in Japan 20 years ago.
As our DL opined recently, how high would rates have to go to crush the consumer spending? And how much collateral damage would it cause?
The econometric models aren’t working real well. Reminding us that in the short run, models are merely an attempt to explain the unexplainable, not scientific fact.
The good news is that T-bill supported money funds are paying out nearly $250 billion a year in interest. The bad news is that this interest is our money to begin with. We are paying ourselves through the miracle money machine. I’m fine with that because what I’m getting is more than half what I will pay in taxes to the Treasury and that feels like a bargain.
I will bet that these numbers are restated downwards and that Q4 will show a move to recession – certainly much lower if not negative. The world has no experience with economic weakness – it is the greater fools that are still buying. Where – and who – is the next fool? Equities say distribution. The market prices are the leading indicator.
H-Man. this economy is like watching a glacier melt, it moves slowly and then big chunks fall into the ocean.