Good News/Bad News Regarding US Economic Growth

It’s surprising that this isn’t getting more attention in the press, but the U.S. Commerce Department has reported that the American economy grew by a remarkable 5.2% annualized pace in this year’s third quarter.  Corporate profits were up 4.3% for the quarter, following a somewhat anemic 0.8% gain in the second quarter.  Consumer spending rose 3.6%, and the next report could top that, based on record-setting sales reported on Black Friday and Cyber Monday. What great news! ¹

The only concerning statistic in the report was the inflation rate; the consumer price index rose at a 3.6% rate, which is well above the 2% rate that the U.S. Federal Reserve Board is targeting. ²

However, if you look at the complete picture, this is a remarkable growth pace, which is not indicating that we’re about to tumble into that long-predicted recession.  Virtually nobody expects this kind of economic growth to continue indefinitely, but then again, it’s hard to find any experts who expected it this year at all.  

So, what’s the “bad news”? Well, a lot of pundits got it wrong. Perhaps the biggest takeaway here is that the “experts” who have been predicting a recession for at least the past two years are, yet again, proven to be wrong.  Nothing against those “experts” (many of whom have impressive credentials!), but the lesson the economy has (uncomfortably for them) confirmed is that nobody can predict the future with any degree of certainty.  Which means none of us should be giving much attention to those sober prognostications, any more than we should be taking investing advice from somebody who is staring into a crystal ball or reading the tea leaves in the bottom of their cup.  The future is, yet again, failing to conform to what the experts tell us it will be. 

Back to good news, we don’t rely on pundits predicting the future to achieve your successful future but rather on a disciplined strategy based on your goals, your comfort taking risk, and academic research and evidence. As importantly, we rely on consistent, open communications with you to ensure we’re on track with what’s most important to you. We’re here for you to answer any questions you have.

Now, I’m going to make my own good news/bad news prediction for you…I see too many cookies and sweets in your future the next four weeks. Beware!

Sources:

¹https://www.cnn.com/2023/11/29/economy/second-estimate-third-quarter-gdp/index.html

²https://www.cnbc.com/2023/11/29/us-gdp-grew-at-a-5point2percent-rate-in-the-third-quarter-even-stronger-than-first-indicated.html As of 11/29/2023
https://www.reuters.com/markets/us/us-third-quarter-economic-growth-revised-up-52-2023-11-29/

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Consumer Price Index (CPI) measures the changes in prices of goods and services purchased by urban households.