3rd Quarter GDP
Stocks surged today. They didn’t crash, did they? Well, that just shows you how fickle the stock market really is. The GDP drove it upwards (but read my article below).
Basically all markets reset to the point they were at 2 days ago. Bonds increased in interest rates.
The Dollar lost over one cent against the Euro.
Gold, Oil and gasoline moved back up.
In the news today…..
3rd Quarter GDP – rose 3.5%. This is the July to September period. 3.5% seems like a great GDP growth number – but why does it feel that the economy is mired down with high unemployment and lack of growth? Here is what I think. First, we are starting from a deflated position in the economy in July. The stock market (a contributor to GDP) had a major climb during that quarter. The Cash for Clunkers and (up to) $8000 first time homeowner government incentives were in place and contributed to the GDP number. All these factors might not be in place in the future.
Here are the last numbers for today:
Dow Jones 30 Industrial – 9963 (up 200 points)
10 Year Treasury Bond – 3.50% (up 0.09%)
Euro – $1.4826
Gold – $1047 (up $17)
Oil – $80.01 (up $2.55)
Gasoline – $2.02 (up $0.03)
I concur that the headline Q3 GDP number was not a sign of a robust economic rebound and start of a V-shaped recovery. Most of the growth was government stimulous which in the long run costs us more money (through interest payments & negative money multiplier).
Calculated Risk and Mish had good writeups yesterday on this topic.
http://www.calculatedriskblog.com/2009/10/random-thoughts-on-q3-gdp-report.html
http://globaleconomicanalysis.blogspot.com/2009/10/market-cheers-over-ugly-gdp-report.html
Thanks David for the links to other good sites.
Tom