Friday, December 20, 2019
The final revision to third-quarter Gross Domestic Product (Q3 GDP) has come out this morning, right in-line with expectations and the previous revision: 2.1%. While it’s nice to see this number above the 1.9% originally reported, it remains on the tepid side overall. Thus far in 2019, we’re tracking GDP growth of 2.4%, beneath 2018’s overall 2.5% and in-line with 2017.
Consumption once again led the way, while business investment lagged. Consumption at 3.2% was a notable improvement from the previous revision’s 2.9% — proving yet again the American consumer is shouldering GDP growth currently. Perhaps with a resolution to the 2-year trade war with China, we’ll see business spending grow the economy at a more impressive clip. As it stands, we have to go back to Q2 and Q3 of 2014 to find GDP numbers up at or over 5%.
Personal Consumption Expenditures (PCE) came in-line with the GDP headline: 2.1%. This figure carries more weight with the Fed when interest rates and other economic policies are decided. The Price Index came in a bit cooler than that: 1.8% on headline, as expected and in the previous revision.
After the market opens, we get more economic data ahead of Christmas Week (when we expect trading volume to fall off precipitously): Personal Income and Consumer Spending, both for November, are looking to improve from the previous month — 0.3% and 0.4%, respectively. Core Inflation, also for November, is expected in-line with the last read at +0.1%. We also expect a Consumer Sentiment Index for December at 99.5, slightly above the last print.
Not only do we expect trading volume to deplete next week, economic data will dwindle as well. It’s not like we need more motivation for the indexes at this stage — pre-markets are all up from yesterday’s close, which happen to be new all-time highs. It would appear December 2019 is the inverse of December 2018, and market participants have to be happy with this.
Mark Vickery
Senior Editor
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