US Final GDP Comes Out as Expected

Alan Penny

26 September 2019

3 min read

  • Final GDP Q/Q comes out 2.0%
  • Final GDP Price Index Q/Q 2.4%
  • Good Trade Balance -72.8 B
  • Unemployment claims 213 K

At 1:30 PM GMT, the United States released GDP figures for quarter over quarter, in a finalized version. As expected, the final GDP figures for quarter over quarter came out at 2.0%, confirming expectations by most economists. Furthermore, the Final GDP Price Index quarter over quarter came out at 2.4%, as expected as well. Concurrently, unemployment claims came out at 213,000, which corresponds to a still very healthy employment situation.

Still leading the charge

As has been the case for some time, the United States GDP figures outpace most of the G10, as the European Union is heading into recession. The United Kingdom is dealing with the effects of uncertainty involving Brexit. The Japanese economy has been slipping as well, and the Chinese economy, albeit growing faster than the US, is growing at a much slower pace than the previous two decades.

The United States will be the first place where money will go looking for growth, and in the global environment, perhaps even some safety as well.

In other words, the United States continues to lead the charge globally. It seems very likely to be the first place where money will go looking for growth, and in the global environment, perhaps even some safety as well.

Positive yield still possible, strong consumer demand

Another thing that works out in favor of the United States is the fact that bonds still pay a positive rate. The European Union is chock-full of bonds that are either yielding negative rates, or close to it. This makes the United States attractive as the economy is stable, and that should continue to boost the US dollar. That being said, it does attract strength for the greenback longer-term, which some people worry about as affecting profits overseas for some of the larger companies in the United States.

Looking at this point, one may think it’s a situation that is going to be negative for markets longer-term. However, the consumer is still strong in the United States, which is one of the biggest drivers of the US economy. With that being the case, it’s very likely that the US  will still lead other G10 economies going forward, at least in the foreseeable future. Even in a scenario where the US starts to drift a bit lower, it is still considerably “less bad” than many of the other economies.

More of the same

Going forward, there is probably more of the same ahead for traders. US stock markets will continue to outperform some of their contemporaries like the DAX, Nikkei, and others. Bonds are still favored in the United States over places like Germany, and the US dollar continues to strengthen against the euro, the pound, and several other currencies such as the Chinese yuan. The longer-term trend has been to the upside for the United States, and the final GDP Q/Q numbers have done absolutely nothing to work against that scenario.

Written By
Alan Penny

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