The Strong US Economy Continues to Grow

The Strong US Economy Continues to Grow

The Strong US Economy is Continues to Grow

The strong US economy is continuing to grow at a 2.9% annualized rate in Q-4, following the latest economic data, the Atlanta Federal Reserve’s GDPNow forecast model showed on Friday.

This was unchanged from the pace for Q-4 GDP Atlanta Fed’s GDP program calculated on  2 November.

The nowcast of the contribution of inventory investment to Q-4 real GDP growth inched down from -0.05 percentage points to -0.08 percentage points after Friday’s PPI release from the US Bureau of Labor Statistics and Friday’s wholesale trade report from the US Census Bureau.

The next GDPNow update is Thursday, 15 November.

The Atlanta Fed announced its decision just hours after the government said that US wholesale prices rose by the most in 6 years last month, led higher by more expensive gasoling, food, and chemicals.

The Labor Department said Friday that the producer price index — which measures price increases before they reach the consumer — leapt 0.6%  in October, after a smaller 0.2% rise in September. Producer prices increased 2.9% from a year earlier.

Excluding the volatile food and energy categories, core wholesale prices rose 0.5% in October and 2.6% from a year earlier.

Despite last month’s increase, the figures suggest inflation pressures are mostly in check.

The Y-Y price increase is lower than it was in the Summer, when it topped 3%. And oil prices declined in October, which will likely to lower gasoline costs in the coming months.

Meanwhile, US wholesale inventories gained slightly more than estimated in September.

The Commerce Department said that wholesale inventories rose 0.4% in September, better than the 0.3% gainer expected by economists surveyed.

Wholesale inventories gained 0.9% in August, the biggest gainer for the measurement since November 2016.

The Fed is keeping a close eye on price changes as it monitors the economy for signs of overheating.

The unemployment rate is at a 49 yr low at 3.7%, and companies are raising wages and salaries to attract and keep workers. Average hourly pay rose in October from a year earlier at the fastest pace in almost 10 yrs.

Fed policymakers finished a 2-day meeting Thursday without changing the short-term interest rate they control. But most economists expect the Fed will hike short-term rates for a 4th time this year when it meets next in December. The Fed has signaled it expects to raise rates 3x more next year.

After its meeting Thursday, the Fed issued a statement that suggested it saw little sign that inflation would accelerate beyond its 2% target. Consumer prices rose 2.3% in September from a year earlier.

Keeping America Great!

Have a terrific weekend.

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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