Let's see -- that's the best GDP quarter this year, and the only positive one. Maybe the Fed should crank interest rates even higher and we'll get even more improvement.
What you're not hearing about Q3 GDP and the craziest damn economy you ever saw
Thursday, October 27, 2022
The best growth in three quarters and a new all-time high, even as financial conditions tighten.
Update to Strategic View
US production of goods and services moved to an all-time high in Q3, reversing to prior quarters of contraction. Exports of goods were the big growth factor, while housing investment and inventories contracted. After the unprecedented magnitudes and velocities of the pandemic recession, GDP data has ceased any rational connection with other contemporaneous data. It is not rational that in the two prior quarters GDP would have contracted at the same time as a robust expansion in payrolls; the Q3 GDP reversal is not connected with a similar surge in payrolls. Prior quarters of contraction took place against a still-accommodative Fed and easy financial conditions. GDP growth has inexplicably improved as financial conditions tightened. The paradoxes in the data call for caution and gradualism by the Fed, and a growing consensus is pointing to just that for next week's FOMC.