GDP

Normally, I wouldn’t comment on any single economic release, but today’s GDP revision adds to the mounting evidence of a strengthening US economy. GDP growth in the third quarter was revised up to 5.0%, the fastest annualized pace since 2003 (see graph below).

This was not a case where the headline misled: all of the underlying components (except net exports) were revised higher. Corporate profits as a percentage of GDP reached a record high (see graph below). Following a 2% decline in output in the first quarter of the year, the economy racked up gains of 4.6% and now 5%.

GDP growth will likely slow from here (the economy is tracking around 3% growth in the fourth quarter). The decline in the price of oil is not a harbinger of imminent recession or of impending deflation. The economy is growing a little faster, inflation pressures are not yet evident, monetary conditions remain accommodative. Santa is being generous this year, and we are grateful.

• 26 Jun, 2015

  More on Rates...

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• 15 Oct, 2014

  MLPs

  Some historical data from Credit Suisse below: MLPs are off 14% this month, pretty bad. Subsequent performance (no ...

• 4 Sep, 2015

  Jobs

  Markets have taken today's employment release as evidence of a weakeningÂjobs market. A mere 173,000 net new jobs ...