At the end of October, we will get our first look at real GDP growth for the third quarter, and it looks like it was solid. We’ll have a more exact estimate a week from now– after this week’s reports on retail sales, industrial production, and home building – but it looks like the economy grew at about a 4.5% annual rate. Even if that turns out right, however, the underlying pace of growth is much slower than what happened in Q3. From the end of 2019 through the third quarter, the avera… View More
Back in 2008, Ben Bernanke and Hank Paulson, using fear of financial collapse, convinced President Bush and Congress to 1) pass a $700 billion bailout of banks (called TARP) and 2) allow the Federal Reserve to pay banks interest on reserves at the same time the Fed moved from a scarce reserve model of monetary policy to an abundant reserve policy. These policies, to spend and print massive amounts of money, were super-sized during COVID. Both policies proved incredibly damaging. The 2008 financ… View More
Yesterday House Speaker Kevin McCarthy was voted down as House Majority leader by just a few members of his own party and most all members of the opposing party. There are no more Norms in Washington but does the end justify the means. What has been going on in Washington for more than a decade is not sustainable and something needs to change. The last few days in Washington has looked like a circus act. The Government is going to shut down because Congress has not approved spending for next ye… View More
While September had been a bit sloppy, will further weakness in October weigh on investor sentiment before the seasonally strong period begins? As shown by the S&P 500 index seasonality chart below, weakness in the last two weeks of September and the first two weeks of October is common. However, we must also understand that the big down move in the market during that period came from historical crashes such as the “Financial Crisis” in 2008. Excluding those periods, the market still ten… View More
We have plenty of data reports to go, but, so far, the third quarter is shaping up to be a strong one for the US economy. The Atlanta Fed’s GDP Now model is tracking a Real GDP growth rate of 4.9% for Q3, which would be the fastest quarterly growth rate since the earlier part of the COVID recovery. Our models aren’t tracking quite so high but are projecting growth at about a 4.0% rate, still strong by the standards of the past couple of decades. However, we would not get too excited about … View More