US Economy Proves to Be Stable

Alan Penny

30 January 2020

3 min read

dollar bills and American flag

  • Headline Preliminary GDP comes in as anticipated
  • Unemployment claims released as well
  • US the best of a bad bunch economically

The United States released GDP figures on Thursday, in what has been a very busy trading session as far as economic figures are concerned. The Gross Domestic Product number will be crucial as to how the US dollar behaves, as well as the stock markets, as it measures the entire US economy.

the quickest peek that the markets get when it comes to the health of the US economy, as well as growth

During the session, the Advanced GDP quarter-over-quarter figures were released, which is the initial look at the growth of the US economy. The numbers will be revised later, but this is the quickest peek that the markets get when it comes to the health of the US economy, as well as growth.

A series of announcements from the US

The Advanced GDP quarter-over-quarter figure came out at 2.1%, as it had been anticipated to do so. Furthermore, the previous announcement was revised to the upside from 1.9% to the reading of 2.1% as well. The United States also released Advance GDP Price Index figures quarter-over-quarter, which came out at 1.4%, much lower than the expected 1.8%. It should be noted that this is the least important of the two announcements.

Beyond that, Unemployment Claims came out at the same time at 216,000, instead of the 215,000 that was called for. That’s close enough that it had no effect on the markets.

Ultimately, this is a very difficult time for a lot of quant and fundamental traders. Most of the fundamental information needs to be thought of as having an asterisk attached to it, because there are so many unquantifiable variables.

Looking at the GDP figures, traders will have to discern whether or not they actually matter. One has to wonder whether or not there is going to be any effect from the coronavirus or some of the other issues out there. Beyond that, the figures don’t capture the economy after the so-called “Phase 1 deal” between the United States and China.

This may be one of those strange times where it is difficult to discern between solid data and noise with regard to a lot of the economic information out there.

The US still leads economically

One of the few things that can probably be taken away from this announcement series with any certainty is that the United States continues to lead the rest of the world overall. At the very least, it is stable in its expectations, while we have had mixed information coming out from varying other economies.

Emerging market currencies have been hammered lately, which is a sign that, perhaps, there is a significant amount of stress around the world in other places such as China, India, and Brazil. This makes sense considering that they all have their own major issues to deal with.

Ultimately, money should continue to look towards the United States, and not only in the stock market. US treasuries have been bid relatively strong over the last 24 hours as well.

Simply put, this is another one of those times where the United States is the “cleanest shirt in the dirty laundry.”

Written By
Alan Penny

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