The first look at 3rd Quarter GDP shows that the U.S. economy expanded by 3.0%, which is better than the expected 2.5%, but not quite as solid as the last review of the 2nd Quarter, which showed a 3.1% growth rate. Whether or not these gains hold in future readings, it’s the first time in three years that we’ve seen an increase of 3.0% for two consecutive quarters. Cynics argue that vendors are ramping up inventory for the holiday shopping season, artificially inflating the numbers. I’d counter that contention by pointing out that any preparation for a big fourth quarter should be a surprise to no one as Christmas rolls around once a year and has for two millennia.
There are reports out that President Trump has narrowed his choice for the next Fed Chair to either Jerome Powell or John Taylor. Though the former would be more likely to keep interest rates low, consensus still calls for three rate hikes next year, and for Janet Yellen to finish her tenure with another 1/4% bump this December. So keep your personal share of retailer inventory reduction in check because your credit card statement is going to be more naughty than nice going forward.
There is still hope in Washington that the Senate will be able to pass a new budget to facilitate a reduction in our income tax brackets–so there’s still hope for ever higher consumer spending in the future.