US Growth: The Beat Goes On

More signs that U.S. growth is self-sustaining; Brexit negotiators scrabbled over the weekend.

DEC 01 2017

“In [this] above-average economic environment, I would expect asset values would be above average as well”
- New York Fed President William Dudley

U.S. Growth: The beat goes on  Lingering skepticism about the U.S. economy took a beating this week. Gross Domestic Product (GDP) for Q3 was revised upward to a consensus-beating 3.2% annualized rate; consumer confidence   for November beat expectations; the 20-city housing price index rose 6.3% year-over-year for September; PMIs were solidly in the expansion range for November; construction spending rose 1.4% in November from the previous month’s 0.3% rise; wholesale and retail inventories fell -0.4% and -0.1% for October, suggesting that sales are outrunning manufacturing. The week’s tree-topper: the National Retail Federation reported that the ailing retail sector drew in more holiday shoppers than expected, both on line and in person. The week’s only worry: the Treasury yield curve continues to be flattish; economists who view this as a precursor to recession are on the alert.

Equity markets responded accordingly. The Dow Jones industrial Average, the S&P500 and NASDAQ Composite Index showed year-to-date gains of 22.4%, 17.8% and 26.9% respectively,1 breaking their own recently-set records. 
 

Brexit: Rough weekend  The negotiations face a deadline of Monday, December 4, according to the original agreement between the EU and UK – which appears unlikely to met as of this writing  And though progress appears to have been made on the amount of the UK’s payment to the EU to compensate for past aid and future income – with the amount growing higher to as much as a $100 billion euro in the face of stern EU demands, the knottier issue of the border between the UK and Ireland will be harder to solve, given its longstanding role as a flashpoint of political conflict within the island.

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