FLASH: US Q-2 GDP higher than estimates on strong consumer spending as the ‘Tight’ Fed, China trade dispute lowed growth
Friday, economist Stephen Moore said he is “relieved” that the economy is at 2.1% growth, but said the numbers are not where they should be because of several factors, including the Fed’s “tightness.”
“I helped put that economic plan together for President Trump,” Mr. Moore he said on TV, explaining that ideally, the growth rate would be at 3-4%.
“We are below where we should be,” Mr. Moore said. “The question is, why are we? If you look at the first half, you know the first six weeks or so of the second quarter, we were looking at 1.5% growth, a bit of momentum actually … I think things are looking a lot better than a couple of months ago for the economy.”
He added, the Fed has been “too tight” by refusing to cut rates, and that “knocked about a half-percent off of growth.“
In addition, the trade dispute with China has also had a negative effect on the growth numbers, he said.
“Without the Fed being too tight, and if we can resolve this trade war, I think we are back to 3% growth.”
Mr. Moore thinks the conventional analysis of whether the Fed should cut or raise rates is wrong.
The Big Q: Why?
The Big A: “It is not that the Fed should cut rates or raise rates based on what the growth rate is. They should be looking at prices … the Fed made 2 big mistakes, one in September, one in December, and raising rates when they didn’t have to, should not have. We paid for that.”
Friday, the major US stock market indexes finishes at:DJIA+51.47 at 27192.45, NAS Comp +91.67 at 8330.21, S&P 500 +22.19 at 3025.86
Volume: Trade on the NYSE came in at 737-M/shares exchanged
NAS Comp +25.5% YTD S&P 500 +20.7% YTD Russell 2000 +17.1% YTD DJIA+16.6% YTD
HeffX-LTN’s overall technical outlook for the major US stock market indexes is Bullish to Very Bullish for the week ended 26 July 2019
Have a terrific weekend.