Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       

Blog Home
   Brian Wesbury
Chief Economist
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
X •  LinkedIn
  Real GDP was revised up to a 2.5% annual growth rate in Q3
Supporting Image for Blog Post

Implications:  The US economy is accelerating into the end of the year and corporate profits are now at a record high.  Real GDP growth was revised up to a 2.5% annual rate in Q3 and the "mix" of growth was more favorable than previously estimated, with upward revisions to personal consumption, business investment, and net exports.  Meanwhile, inventories were revised down, leaving more room for future growth.  In the past two quarters, real GDP has grown at a tepid 2.1% annual rate.  However, we believe this supposed "soft patch" is largely the result of difficulties the government is having with seasonally-adjusting imported oil prices.  That's why the government says trade has been such a huge drag on real GDP growth in Q2/Q3.  Excluding trade from the GDP numbers gives us the growth rate of domestic purchases, which are up at a strong 4.7% annual rate.  If we're right on the oil price issue, look for a "pop" in the GDP growth rate in Q4, even over and above the actual acceleration in the economy.  Today's GDP report also showed corporate profits hitting a record high, growing at an 11.5% annual rate in Q3.  The gain in profits in Q3 was mostly powered by domestic financial companies, whose profits increased at a 46% rate.  Profits from abroad fell slightly.  Bottom-line: loose monetary policy has already gained traction.  Nominal GDP is up 4.5% versus a year ago.  We don't need quantitative easing.

Click here for the full report.
Posted on Tuesday, November 23, 2010 @ 10:58 AM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.