GDP Whopper
As we highlighted in our post on the 18th entitled (link also) “ GDP Expectations & MV=PQ and Friday's Settles “ the GDPNow expectations, well today GDP hit and printed a massive +33.1% for Q3. This was the biggest annualized increase in US history. Baseline estimates leading up to the number was 32%, here’s the details:
Personal spending up an annualized 40.7% (record)
Personal Consumption Expenditures (PCE) 25.27% of the 33.08% GDP increase, up from a -24.01% decline in Q2
Fixed Investment +4.96% after subtracting -5.27% in Q2
Private Inventories +6.62% in Q3 after subtracting -3.50% in Q2
Net Exports -3.09% from the final print after adding a modest 0.62% in Q2
Government consumption -0.68%, after adding 0.77% in Q2.
However we have to be realistic right and despite the upcoming Trump Tweets touting this excellent number, in fact here is the White House tweet now:
Despite all of this euphoria, we must remain vigilant as to the fragility of the situation as yoy GDP is still negative at -2.9%. (Zhedge Chart)
Now, to be fair, this is no ordinary year and to only be down 2.9% in our book is something to be proud of, however the Austrian’s in us don’t like the fact that we doubled the Federal Reserve balance sheet to now north of $7 Trillion and at a $18.5T economy, means we are at 38% Fed balance sheet to GDP and this is not a trajectory that we welcome. Printing money has its costs and its most certainly born by the bottom 90% as the top lengthens its distance from the rest of the pyramid.
Finally Deutsche Bank put out a great chart highlighting their future trajectory of GDP and we have it here:
We don’t want to predict how this will pan out, but one thing is certain, this election will determine how much stimulus will be unleashed, we have our opinions but we will just wait to see how this one transpires.
Finally all the Asian market equity euphoria was promptly smacked down by Europe and lets see if NY can lift this tide here once again;
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