October Surprise May Be The Economy
Published Friday, October 9, 2020, 8:45 p.m. EST
The computer model devised by the Atlanta Federal Reserve to predict economic growth in real time is forecasting the economy is growing 50% faster than what's expected by two independent surveys of economic experts. The latest consensus forecast of 10 leading economists polled monthly by Blue Chip Economics is for a growth of 24% in the fourth quarter of 2020 versus.
The GDPNow model is an algorithm created by the staff at the Atlanta Fed to predict the current quarter's final rate of growth in U.S. gross domestic product (GDP) in real-time, based on recent trends. So far, trends are good indeed.
The 60 economists surveyed in mid-September by The Wall Street Journal predicted the fourth-quarter of 2020 growth rate will come in at 23.9%.
With both the Blue Chip and WSJ experts recently predicting a fourth-quarter rate of growth of 24% and the GDPNow model much more optimistic, key fundamentals are signaling strength, which may mean an economic surprise is under way.
The newly released survey of purchasing managers at large corporations shows the manufacturing economy, which contributes 11% of the total U.S. GDP, was back in the normal range, at 55.4.
Moreover, the services industry, which contributes 89% of U.S. economic growth, is also booming. With the overall index at 57.8 and the new orders subindex at 61.5, the data supports an optimistic view.
The Standard & Poor's 500 stock index closed Friday at 3,477.13, a gain of +0.88% from Thursday, and +3.77%from a week ago. The index is +43.38% off its March 23rd bear market low.
The S&P 500 saw its second straight week of gains and its biggest weekly gain since July. Stock prices have swung wildly since the coronavirus crisis started in March and volatility is to be expected in the months ahead.
The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is a market-value weighted index with each stock's weight proportionate to its market value. Index returns do not include fees or expenses. Investing involves risk, including the loss of principal, and past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted.
Nothing contained herein is to be considered a solicitation, research material, an investment recommendation, or advice of any kind, and it is subject to change without notice. It does not take into account your investment objectives, financial situation, or particular needs. Product suitability must be independently determined for each individual investor.
This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete, and is not intended to be used as a primary basis for investment decisions.
- The Good News Is All This Bad News
- Four Signs A Recession Could Be Short And Shallow
- Odds Of A Soft Landing Shrunk After Friday's News
- Bad Inflation Surprise Sends Stocks Down Sharply
- It Could Be A Long, Hot Summer For Investors
- What A Difference A Week Makes
- Amid Stock Market Turmoil, +2.3% Growth Projected In 2022
- Staying On Track Amid The Ukraine And Inflation Crises
- For Investors, 2022 Is Turning Into A Test
- Is The Economy Brightening? Or Is The Federal Reserve Slamming The Door On Growth
- Financial Economic News In Perspective
- Stocks Closed Lower This Week On Inflation Fears
- The Main Risk To Investors Now Is Federal Reserve Policy
- Service Sector Jobs Are Catching Up
- Stocks Returned +8.3% More Annually Than 90-Day T-Bills In Past 20 Years
- Perspective Amid A Moment Seeming Fraught With Investment Risk
- Two Years After The Pandemic Began
- Turning The Page On A Dark Period In History
- Russia-Ukraine War Erupted And Inflation Worsened But Outlook Drove Stocks Higher For The Week
- Investment Perspective Amid Risks Of Fed Tightening, Covid Variants, And European War
- S&P 500 Lost -1.9% Friday; Latest U.S. Economic Data Are Strong
- January Job Formation Figures Crushed Expectations, Amid A Shortage Of Workers
- S&P 500 Closed Up 2.4% Friday After A -10% Correction
- Stocks Declined Sharply, Even As Economists Expect 3% Growth In 2022