The third quarter is nearly over, but there is still a month of data before the next GDP report.
The GDPNow Latest Estimate is 3.1 percent as of September 27, 2024
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2024 is 3.1 percent on September 27, up from 2.9 percent on September 18. After recent releases from the US Census Bureau, the US Bureau of Economic Analysis, and the National Association of Realtors, a decline in the nowcast of real personal consumption expenditures growth was more than offset by increases in the nowcasts of real gross private domestic investment growth and the contribution of net exports to third-quarter real GDP growth.
GDP vs Real Final Sales
Real final sales is the bottom line estimate of GDP and the number to watch.
The difference between GDP and Real Final Sales is inventory adjustment which nets to zero over time.
Nowcast Comments
To date, this has been one of the most stable nowcast quarters that I can recall. The entire range for the quarter has been from 2.0 to 3.1 percent with not a lot of gyrations.
The range for real final sales is even narrower at 2.2 percent to 3.0 percent.
Today’s Income and outlays report is nearly the end of August economic data minus a couple of minor reports.
For discussion of income and outlays and the PCE price index, please see Real Personal Spending and Income Rise 0.1 Percent in August
The Fed’s preferred measure of inflation is the PCE price index, discussed in the above link.
Compare data and monetary policies when Trump first ran for president in 2016. In August 2015 the stock market had several 1 day routs of more than 1000 points on the Dow, from its stagnation at historical highs. Real GDP growth had stair-stepped down each quarter. In January 2016, the GDP original estimate for the last quarter of 2015 was 0.7 percent. BEA revised this estimate, in April 2016, to 1.4 percent. Double the original estimate.
http://www.bea.gov/news/2016/gross-domestic-product-4th-quarter-and-annual-2015-advance-estimate
Election year, April 2016, BEA estimated first quarter 2016 Real GDP growth at 0.5 percent. In June 2016, the third revised estimate for the first quarter, became 1.1 percent, again double the original estimate.
http://www.bea.gov/news/2016/gross-domestic-product-1st-quarter-2016-advance-estimate
http://www.bea.gov/news/2016/gross-domestic-product-1st-quarter-2016-third-estimate-corporate-profits-1st-quarter-2016
Revised estimates didn’t pacify Fed Chairman, Janet Yellen. In January 2016, she lowered 10-year Treasury yields from 2.4 percent to an average of 1.7 percent, and kept rates suppressed until Trump was elected in November. Yellen then released the restraints and rates returned to 2.4 percent in a single month. Liquidity for lower rates didn’t come from the market, as stocks recovered from their rout by mid 2016, but rates remained at historical lows. Lows that matched those of the mortgage crisis.
Now, Treasury Chief Yellen, has manipulated Treasury issuances to drop yields on 10-year Notes from 4.7 to 3.8 percent, with help from Fed jawboning. This has lead to a wave of refinancing, for recent home buyers, before the elections. A 20 percent decline in long-rates when the FFR was lowered 10 percent.
https://www.marketwatch.com/story/is-the-treasury-conspiring-to-manipulate-markets-and-the-economy-a-new-paper-sparks-debate-on-wall-street-0883625c
Remember, Greenspan’s failure to raise 10-year Treasury rates from 4 percent proceeded the mortgage crisis.
So, Mish, whatever happened to that recession?
Danielle DiMartino Booth says the recession started 12 months ago.
Just absolutely crazy talk.
Steady as she goes.
US GDI positive update also now confirming GDP numbers.
US slow growth continues.
The Fed cut gave China room to move. And they did. China announcing lower rates and more internal stimulus.
My energy focus has been trending more towards natural gas in the last month; selling “some” oil producers and adding more natural gas producers. I am expecting a decent run in natural gas prices over the next 2 years.
Good point about the Fed’s cut giving China room to push stimulus.
Thanks.
I’ll toss this in for both politics and economics … CRE drops 91% (for one building at least) in Minnesota ..thanks Tim!
https://finance-commerce.com/2024/09/downtown-minneapolis-office-towers-sell-at-steep-discount/
What did Tim have to do with any of it? From the article, it states workers don’t want to go work in old moldy musty boring buildings.
“Most employers today are saying, ‘What does it take for me to get my people back in the office?’” Vos said. “They want nice amenities, they want conference spaces, they want good fitness space. They want exciting third workspaces within the building, and Forum buildings could have a lot of that, but it would just take an investment.”
Mishandling Covid is what caused this mess to begin with and you know who was president back then.
People burning gas and risking their lives on the freeway to get to a place where they look at screens and push plastic buttons was always moronic. Covid just proved that.
Yep, two straight quarters of 3% GDP, so the recession watch continues to be put on hold.
Core PCE inflation accelerates to 2.7% YoY. Initial jobless claims fall to 218K and 4WMA falls below 225K.
But thank goodness the Fed cut 50 BP. They’re doing everything they can to create a rebound in home sales. Higer sales will mean even higher prices which means OER continues its climb.
Powell / Yellen need annualized interest expense to move back below $1T.
I don’t believe anything that our government publishes regarding economic data. Consider this headline from Zero Hedge:
“Mystery Of Upward GDP Revision Solved: You Are All $500 Billion Richer Now According To A Revised Biden Admin Spreadsheet”
Mish, curious on your thoughts since you believe GDP growth is negative(based on your recession call).
They’re all lying to you!
11,200 people are retiring each and every day in the USA. That is a double whammy for price inflation. (1) Those older people require more services than younger people since lack of health not only requires more (expensive) care, but it also means several DIY services people could do while younger have to be contracted out due to varying degrees of infirmity. (2) There are not enough young people in the USA to replace the number of people retiring, even ignoring point (1) that says the number of required service jobs will need to increase faster because of retirees. This not only pushes up wage pressures, but also “social service” costs tied to illegal immigration.
Mish *knows* all of this, given that he has published multiple articles on immigration and retirees, but he doesn’t seem to *believe* it. He keeps deprioritizing these fact when explaining the current economy, when in fact immigration and retirement should be the rose colored glasses through which he first sees all issues. Follow The Money (aka growth story)! In the near term, it is all inflationary!!
PS The amount of transfer payments highlighted in Mish’s last article drives this argument home! Immigrants also push up shelter costs, way up. Another Mish topic that drives the point home!
According to Mish’s chart in his article earlier today, transfer payments were 19% of total inflation adjustedl income in Jan 2020 and 21% of total inflation adjusted income today. For those of you not used to working with macroeconomic numbers, 2% increase in 3.5 years is *huge*. And for anyone who doesn’t think illegal immigrants are pushing up shelter costs, ask yourself, if the 10+ million illegal immigrants were to disappear tomorrow, almost all of whom are renters, would their loss have an impact on the vacancy rate of the 44 million renter households that exist in the USA? Math question now for all you rocket scientists out there — how many percentage points would that 10+ million loss drive up the vacancy rate from current levels? How would that increase in vacancy rate affect the cost of rent? Whoever downvoted me needs to revisit that vote.
No boomer believes they will get sick or die. It’s an astonishing blind spot… but it’s in the process of being rectified.
If it’s any consolation, Costco had a mixed earnings report so if we combine the bad sales at Apple, Costco and FedEx – all of whom cater to high end consumer then things are slowly deteriorating economically at the top.
https://finance.yahoo.com/video/costcos-mixed-earnings-report-means-143609179.html
The fed cut provided a temporary hit of adrenaline for the sickening patient so we’ll all feel good until the next quarter.
For someone who owes $50k on a HELOC, a 1/2% cut in prime rate saves them $21/month in interest. That’s not much of an adrenaline hit. Mortgage rates are about where they’ve been since early August.
And what about an investor that has $5m outstanding and saves 1/2%? Do the math for me because you’re so good at it.
What part of “high end consumer” did you not understand?
Well it would be 100 Xs as much, now wouldn’t it? I wouldn’t expect many people with $5 mil lines of credit to be waiting in line at Costco to make their high end purchases, but I could be wrong. They’re probably finally able to afford an Apple product.
LVMH is actually high-end (more than costco) … how they doing? (as Joey from friends says)
Well I know Mitt Romney ($100m net worth) was caught shopping at Costco right after he lost the election:
https://www.usatoday.com/story/onpolitics/2012/12/05/romney-costco-shopping/1748101/lection.
But I don’t think you understand the Costco customer base. Many are small business owners that go and buy items for their restaurants, shops, etc. They are not all consumers buying stuff for home.
For someone with $100,000 in a bank or money market that 0.005% cut is costing them $41.67 per month of spendable cash they were collecting in interest. For some retirees that could be an adrenaline hit.
I looked up the Costco results. Consensus Q4 revs estimate was $79.973B, actual was $79.687B, or 0.35% less. EPS was $5.29 v consensus of $5.08, or 4% more. Stock was off 1.79%.
I don’t follow the company, but my past experience as an analyst says that traders might have become accustomed to Costco beating all the numbers. (I don’t know if that’s the case, only idly speculating.) This would account for the outlandishly high valuation, more than 50x trailing.
By itself, in isolation, nothing whatsoever wrong with those results.
No wonder we needed an “emergency” 50 bps rate cut!
Sounds like the election will have to be decided in the middle east. If not by November, maybe Kamala will be known as a wartime president.
Boots on the ground for our greatest ally!
Naw … Iran (and team) is standing down until after the election; they don’t want to rock the boat and have their candidate lose. That said, I don’t quite understand Hezbollah and their aggression past few weeks… only explanation is Gaza is no longer keeping IDF sufficiently busy.
Now, OTOH, Israel will POUND anyone they please for the next couple months; after the election, they may lose their sugar daddy.
This is bad news. (For MAGA)
Sounds like Jerry should go 75 bps …
Juice this puppy till November! Then the economy will be unburdened.
No recession yet. Probably end of Q4 or early Q1 2025. We need a few more months of the soft-landing goldilocks rate cut euphoria to sink in before they pull the rug out.
I bought puts on SPY for June 2025 ATM strikes. If this sucker goes down, I’ll be riding the money train to celebration station.
good hedge but looking I see June puts at ~$300…while March only $200. SHTF by March I’d think…just imagine a kamala inaugural (or ignorant-al) address!
A Harris win should sweep in downballots and senate too.
my take on her speech – a holistic view of aspirational optimism…. all while working to remove the filibuster, add 6 more to the SCOTUS bring in DC/P.R. as states to solidify blue control of Senate … boom, market tanks 20%+ by mid-Feb.
I actually expect these to print money before the end of the year but March or June will work, as long as the profits roll in I’m ok with them anytime.
hmm….ok, yes, by Y/E for Kam; June makes sense in case of the unlikely MAGA/MAHA win. By June, both recession will bite and the market gets to see the Trump-chaos in action. have fun!
PS – if the electoral college gets messy, I forget …who runs the count in the Senate? (Maybe she should recluse herself 🙂 ) I think we know who’ll win.
LOL – Celebration Station! If it were Papa Dave he’d be helming the Gloat Boat
Port strike : Nasrallah’s bunker near Beirut airport was hit by 10 bunker busters bombs
Hopefully the U.S. fully funded the operation. Nutty-Yahoo told us if we don’t fund Israel, we will have to put U.S. troops on the ground.
Nuclear blackmail. Nixon’s biggest mistake was covering up Israel’s nuclear arsenal. They’ve had us by the balls ever since. And still the jews HATED him.