October Surprise May Be The Economy
Published Friday, October 9, 2020, 8:45 p.m. EST
The computer model devised by the Atlanta Federal Reserve to predict economic growth in real time is forecasting the economy is growing 50% faster than what's expected by two independent surveys of economic experts. The latest consensus forecast of 10 leading economists polled monthly by Blue Chip Economics is for a growth of 24% in the fourth quarter of 2020 versus.
The GDPNow model is an algorithm created by the staff at the Atlanta Fed to predict the current quarter's final rate of growth in U.S. gross domestic product (GDP) in real-time, based on recent trends. So far, trends are good indeed.
The 60 economists surveyed in mid-September by The Wall Street Journal predicted the fourth-quarter of 2020 growth rate will come in at 23.9%.
With both the Blue Chip and WSJ experts recently predicting a fourth-quarter rate of growth of 24% and the GDPNow model much more optimistic, key fundamentals are signaling strength, which may mean an economic surprise is under way.
The newly released survey of purchasing managers at large corporations shows the manufacturing economy, which contributes 11% of the total U.S. GDP, was back in the normal range, at 55.4.
Moreover, the services industry, which contributes 89% of U.S. economic growth, is also booming. With the overall index at 57.8 and the new orders subindex at 61.5, the data supports an optimistic view.
The Standard & Poor's 500 stock index closed Friday at 3,477.13, a gain of +0.88% from Thursday, and +3.77%from a week ago. The index is +43.38% off its March 23rd bear market low.
The S&P 500 saw its second straight week of gains and its biggest weekly gain since July. Stock prices have swung wildly since the coronavirus crisis started in March and volatility is to be expected in the months ahead.
The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is a market-value weighted index with each stock's weight proportionate to its market value. Index returns do not include fees or expenses. Investing involves risk, including the loss of principal, and past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted.
Nothing contained herein is to be considered a solicitation, research material, an investment recommendation, or advice of any kind, and it is subject to change without notice. It does not take into account your investment objectives, financial situation, or particular needs. Product suitability must be independently determined for each individual investor.
This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete, and is not intended to be used as a primary basis for investment decisions.
- Are The Five Stocks Driving The Market's Great Returns Overvalued?
- Despite Gloomy Jobs Report, The Economic Outlook Remains Bright
- S&P 500 Rebounded Today After A Difficult Week And Month
- China Financial Contagion Fears Come And Go In A Few Days
- August Retail Sales Indicate The Recovery Is Intact
- This Week’s Financial Economic News
- Latest Financial Economic News For Investors
- After Fed Inflation Policy Speech, Stocks Closed At New Record High
- Stocks Closed 1% Off All-Time High; Strong New Economic Data
- Stocks Broke Record High Again This Week
- U.S. Jobs Picture Improved, Covid Variant Risk Declined, And Stocks Closed Week At Record
- This Week’s Economic And Investment News
- Positive Earnings, Housing, and LEI News; Stocks Closed Week At A Record
- Today Versus Post-War History Of U.S Economic Cycles
- Stocks Surged 1.1% Today, Closing At A Record High For The Third Straight Week
- Strong Jobs Report Confirms Recovery
- What's Ahead For The Second Half Of 2021?
- Despite Strong Economic News, Stocks Dropped This Past Week
- Stocks Closed At A Record High; What's Expected For The Rest of 2021?
- Jobs Situation Report Pushes Stocks A Fraction From All Time High
- Inflation Rate Doubled In Past Two Months
- Fed Signals It's Thinking About Starting To Talk About Tightening
- Expect Inflation To Make Investors Nervous Through 2021
- Stocks Closed At A Record, Ignoring A Bad Jobs Report