|
|
 |
|
|
|
|
Brian Wesbury
Chief Economist
|
|
Bob Stein
Deputy Chief Economist
|
|
 | Real GDP Was Revised Upward to a 33.4% Annual Growth Rate in Q3 |
|
| Posted Under: Data Watch • GDP • Government • COVID-19 |
Implications: Real GDP growth for the third quarter was revised up to a 33.4% annualized pace versus the 33.1% reported a month ago. Growth in corporate profits was revised up, as well. These figures are welcome news but shouldn't change anyone's interpretation of what happened in the economy in the third quarter or what's happening now. The economy revived sharply in Q3 and is likely continuing to grow in Q4, although at a slower pace. As to the near future, Q1 in particular, the pace of growth will heavily depend on the path of COVID-19, the pace of vaccination, and the restrictions on business activity being imposed by governments. Between the second half of 2020 and all of 2021, the first quarter will probably be the weakest, although we still think it will eek out positive growth, following what we're currently estimating to be a roughly 5.0% growth rate in the fourth quarter. Nominal GDP growth (real growth plus inflation) was upwardly revised to a 38.4% annual rate in Q3. Nominal GDP is down 1.7% in the past year but up at a 1.0% annual rate in the past two years. In addition to the massive growth rate in the economy, today's report also provided a second look at economy-wide corporate profits, and like the GDP reading, corporate profits were revised higher. Profits rose 27.4% in Q3 compared to the previously estimated increase of 27.1%, hitting an all-time record high, even higher than pre-COVID-19 profit levels. Profits are up 3.5% versus a year ago. Plugging economy-wide profits into our capitalized profits models suggest that, even at higher interest rates stocks are still relatively cheap.
Click here for a PDF version
|
|
|
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.
|
|
Archive
Search by Topic
|
|
|
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.
|