The second estimate of Q3 US GDP, released on Wednesday, painted a similar picture to the advance read: The world’s largest economy performed quite well last quarter.
The headline growth print was an unrevised 2.8%, solid and hardly indicative of a looming recession, although I suppose the bears among you will argue these things tend to come out of nowhere.
Wednesday’s release found GDI tallied at 2.2%, meaningfully lower than the headline GDP print, but still healthy. The average, which the NBER uses as part of its official recession-dating process, was 2.5%.
As the figure shows, there was a little slippage from Q2, but no evidence of a meaningful slowdown.
The same applies to the second estimate of the personal consumption component in the GDP release. At 3.5%, it was revised lower from the blistering 3.7% advance read, but if anything, that marginal downside’s good news to the extent it tempers upside inflation risk.
Speaking of inflation, the core price index was revised slightly lower for Q3 to 2.1% from the initially-reported 2.2%.
Meanwhile, jobless claims printed another multi-month low at 213,000, unchanged from the prior week’s initial reading, and down 2,000 from the revised headline for NFP survey week.
The four-week moving average is now just 217,000.
Continuing claims for the week to November 16 were 1.91 million, slightly above estimates. That series is elevated, and you can use it to make a recession case if you’re hell-bent on it, but… well, the US isn’t in a recession.
All in all, the first of Wednesday’s pre-Thanksgiving macro data underscored the notion that Donald Trump’s inheriting a strong economy, with an important caveat: Americans plainly care more about inflation than they do about jobs and growth, which means it’ll be imperative for Trump to sustain the disinflationary trajectory that at least has prices rising less quickly than they were a couple of years ago.
“Here you go, Donald. And son?” “Yes daddy?” “$30 trillion is a big responsibility.” “I know, poppa. Don’t worry. I gots a very large b-b-b-b-brain.”
Trump is inheriting a decent economy, which needs strategic long term adjustments, not shock therapy. Not his strength.
Trump, via DOGE, will simply push the financial responsibility for various programs (currently being managed by the states – but paid for with Federal money given to the states) down to the states and at the same time, stop the Federal government from sending money to the states to pay for such programs.
Then he will declare “success” at reducing Federal spending “waste”.
Meanwhile, the states will have to either raise taxes or borrow money to offset the decline in Federal money that is no longer available because the people will still need and want such services.
The populace will cry “fowl” and see through Trump’s shenanigans.
Won’t the populace just blame immigrants and China for it?
I am thinking that if Trump does implement the 25% across the board tariff and say getting rid of say 500k of immigrants a year it is not going to matter what the Fed does. The economy will crash, I’m thinking the GDP will go -5% and interest rates will be about 10% to curtail the 15% yearly inflation. Of course that is if the Fed is allowed to stay independent, if not, than we will have a Turkey situation, so maybe 3% 10 year treasury, with 15% inflation.
His tariff plan may be just a red herring to cover for his remake of the federal system including military to be loyal to him.
Forgot to mention the empty store shelves from countries not shipping goods to us because it’s not worth it to the suppliers.