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By HaleStewart December 3, 2017 7:56 am
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US Economic Week in Review: Thank God the Economy is On Autopilot Right Now

            The autopilot economy continues growing.  This week, the BEA released the second estimate for second quarter GDP, which showed solid, broad-based growth.  Personal consumption expenditures also rose.  Consumer confidence hit a 17-uyear high and new home sales rose to their highest level since the recession.

            The BEA released their latest estimate of 3Q GDP, which had a 2.3% Y/Y headline number percentage change.  The following table shows that gains were broad:

The pace of topline headline growth is increasing:

The following charts highlight several important aspects of the report:

Equipment investment (top chart) and, more specifically, industrial equipment investment (bottom chart) have increased for four and six quarters, respectively.

However, residential investment may be topping:

The top chart shows total residential investment while the bottom chart is residential construction.  Both have recently stalled.

            Consumers continue to spend at a consistent pace:

Total PCEs (top chart), have printed between 2.5%-3% for some time.  Durable goods spending (middle chart) ticked higher while non-durable goods spending (bottom chart) has improved solidly over the last few quarters.

            New home sales were strong, increasing 2% M/M.  The Census has reported sales between 548,000 and 638,000 since January 2016; this report’s headline number was 685,000, which is meaningfully above the previous range:

While sales in the South were up 1.3% -- which you’d expect after the hurricanes – the other regions also saw increased: NE +30.2%, Midwest +17.9%, and the West up 6.4%.

            Consumer confidence as measured by the Conference Board hit a 17-year high.  This data is confirmed by the University of Michigan’s Consumer Confidence reading.

          In 2009, F. Hale Stewart, JD. LL.M. graduated magna cum laude from Thomas Jefferson School of Law’s LLM Program.  He is the author of three books: U.S. Captive Insurance LawCaptive Insurance in Plain English and The Lifetime Income Security Solution.  He also provides commentary to the Tax Analysts News Service, as well as economic analysis to TLRAnalytics and the Bonddad Blog.  He is also an investment adviser with Thompson Creek Wealth Advisors. 

   

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