There have been three huge interrelated financial events at the end of October. We had the primary pass at Q3 GDP, adopted by the Fed meeting (one other reduction within the Fed Funds Rate), and the week ended with a much stronger than anticipated jobs report. The information proceeds to indicate that the traditionally accepted post-WWII growth model (emphasis on positive combination GDP progress) is no longer relevant, and policies based on it are flawed.
GDP came in at +1.9%, higher than anticipated (+1.6%), albeit, first passes by BLS embrace numerous guesstimates. It’s likely that, in a slowing financial system, the revisions might be to the drawback. Everything within the GDP report was weak beside the buyer. However, even that progress rate, +2.9%, was significantly slower than Q2’s 5.0%. With consumer confidence now falling, consumption will additional deteriorate in Q4 and Q1.
Consumer Confidence Index of Conference Board dropped to 125.9 (Oct.) vs. 126.3. However, it’s expectations that drive spending, and these have fallen off a cliff: Oct.: 94.9; Sept.: 96.8; Aug:. 106.4; July: 112.4. As well as, auto buying plans, at all times a good indicator of the buyer’s disposition, fell to 9.9% (Oct.) from 12.1% (Sept.) and 13.0% (Aug.), the lowest since October 2015.
Of the 1.9 percentage level development, 0.8 percentage factors, or 42%, came from auto manufacturing unit output. This occurred at a time when client spending on autos was stagnant. (The Conference Board’s auto-buying plans index is at the lowest degree since 2015.) Maybe it was GM’s response to the approaching strike. In any case, without that, actual GDP development would have barely been greater than 1%.
The third event was the employment report, which surprised to the upside. October jobs (Establishment Survey) rose 128k (consensus was 85k) and was a lot stronger than markets had anticipated.