Q3 GDP
Steve M. Wyett, CFA
Chief Investment Strategist | Public Speaker | Market Analyst
This week's commentary is provided by Mark Gibbens, CFA, CAIA, CFP?, Investment Strategist at BOK Financial.
The American economy posted another round of solid economic growth this past quarter, with gross domestic product (GDP) at 2.8%. The U.S. consumer continues to impress investors with its willingness to spend and provide a supportive underpinning to economic growth. The U.S. savings rate has shown to be reasonable, and while credit card delinquencies are on the rise from COVID-era lows, they are not on par with typical delinquency data we have seen in the past showing an overly stretched consumer.
The longer-term growth outlook for the U.S. economy still appears to be closer to 2% than 3%. Still, it's been a losing proposition to bet against the U.S. economy as it has emerged from the COVID-era and recession fears have diminished.
There are many gauges to forecast official GDP growth, and we thought it would be interesting to look at Wall Street's most favored gauge, the Atlanta Fed's GDPNow model, to see how well it has stacked up recently against actual GDP, using the last forecast prior to the official GDP release. It has been impressive. The gauge has been very accurate outside of the first quarters of 2023 and 2024.
While actual GDP is a bit of a backward-looking indicator, strength tends to beget strength. In other words, it's not likely the economy is headed into negative growth territory soon.? The message we are receiving from the labor market is that job growth will continue. On Friday, investors will receive an update on the labor market with the official jobs report. Unfortunately, this week's jobs report could be noisy due to two recent hurricanes and a strike at Boeing.
However, the jobs report will still be heavily scrutinized this week as a symbol of economic health. The private payroll report put together by ADP has already shown significant job growth this week and its first positive surprise in 15 months. Currently, we see the U.S. economy as well positioned as we head into the final two months of the year.