Fourth Quarter Growth Takes Off

Third quarter GDP slowed to an annual rate of 2.0% from Q2’s 6.7%.

But early data suggest the economy is off to a quick start in Q4. 

  • First-time claims for unemployment insurance are down sharply over the last six weeks and are at a pandemic low—Dept of Labor.
  • Retail sales jumped 1.7% in October, more than double expectations—Econoday/U.S. Census, though some of the increase is likely higher prices.
  • The Atlanta Fed’s GDPNow model is tracking Q4 GDP at 8.2%.
  • Moody’s, which has a similar model, places growth at a still-strong 7.4%.

It’s still early in the quarter and strong data could moderate, but it’s an impressive start. 

Investor’s corner

Fast economic growth is expected to fuel strong profit growth. Mix in low interest rates and the major stock market indexes have performed well since early October.

However, inflation is rising. Might the Fed take on a more aggressive posture next year?

We won’t try to outguess the Fed or issue forecasts for interest rates. We don’t believe anyone can accurately and consistently peer into the future.

What we do believe is based on rigorous academic research. Investors with a long-term focus and a holistic financial plan have historically been on a straighter path toward their financial goals.