Do We Finally See Economic Growth? Not a Chance

1st estimate of the 3rd quarter came in at a 2.5% annualized growth. That is way too meager and should not result in happy faces, besides a second and eventual third revision on the 3rd quarter may see a much lower GDP than 2.5%.

Underlying the lack of economic growth is the everlasting unemployment, where initial claims for unemployment benefits continue to hover above the 400,000 level. As a matter of fact, every October week saw new unemployment claims above the 400,000 mark and that will not make any dent in the unemployment rate.

Private job creation needs to rise to a minimum of 200,000/month to show our economy is alive, and new weekly claims for unemployment benefits need to fall below the 300,000 mark. When that happens, our economy is finally growing again. Only the consumer can pull the U.S. economy out of the current economic stagnation, however, the consumer’s assessment of current conditions (consumer confidence) is at its lowest point since December while consumer expectations are at their lowest point since the recession.

Typically and synonymous with a rise in consumer confidence is a rise in retail sales. With the consumer feeling better in our economy, they are also more willing to part and spend their money.


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