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.
This article was written by a professional financial journalist for Forrest Financial Services and is not intended as legal or investment advice.
- Strong Jobs Report Caps A Week For The Record Books
- Why Stocks Rose Friday Despite A Rise In Inflation In April
- Weekly Investor Update
- The Confluence Of Bad News For Recent Retirees And Those About To Retire
- Good And Bad News This Week For Investors
- Getting There: The Economic Balancing Act Progressed In March
- Stocks Gained Friday But Closed Fractionally Lower For The Week
- Good News On Inflation But A Recession May Be Hard To Avoid
- Analysis: The First Data Since The Banking Crisis Erupted In March
- Stocks Gained 7% First Quarter And Other Good Financial News
- Despite Bank Fears And A Fed Hike, Stocks Climbed For The Week
- Bank Panic And Strong 1Q '23 Economic Growth
- Mixed Economic Signals And A Bank Failure
- Service Sector Remained Strong In February, Soothing Investors For Now
- Inflation Rose In January, Indicating Tight Monetary Policy May Continue Into 2024
- Amid Divergent Data, Here's What To Know
- Optimistic Again, Will A Fed Algorithm Be Right Again?
- The Bipolar Economy Of 2023
- On Wednesday, We’ll Know If The Federal Reserve Will End Inflation By Causing A Recession
- Technology Drove S&P 500 1.9% Higher Friday, But Look At Tech's Terrible 2022 Loss
- Here What To Know To Invest Wisely
- Prudence Requires Positioning Portfolios For An Economic Expansion