Stefanie Kammerman, the Stock Whisperer, to tell you the Whisper of the Week: GLD and SLV in my week...
Third quarter GDP comes in on projection; unlikely to change Fed's decision next week
10/29/2010 1:48 pm EST
Housing was the big drag on the economy. (Big surprise, right?) Residential investment—home buying to most of us--fell 29% in the quarter. That more than offset a 9.7% gain in nonresidential investment. Nonresidential structures—commercial real estate—grew by 3.9% in the quarter, up from a drop of 0.5% in the second quarter. That’s good news for the still beleaguered commercial real estate market (and the banks with big loan portfolios in the sector.
The bright spot in the numbers belonged to consumer spending which grew by 2.6% in the quarter. That was the strongest quarterly growth rate since the fourth quarter of 2006 and a significant increase from the 2.2% growth rate in the second quarter. The growth rate for consumption of goods (2.8%) and services (2.5%) was about equal for the quarter but that disguises a big increase in the consumption of services from the second quarter when consumption of services grew by just 1.6%.
What conclusions can we draw from today’s numbers?
First, that economic growth remains weak enough so that the Federal Reserve is likely to go ahead with its second round of quantitative easing.
Second, that although growth remains weaker than the country needs to cut into unemployment, the signs of life among consumers are encouraging.
And third, that the combination of weaker than desired growth and signs of improvement in consumer spending are likely to keep the Fed cautious and lead to a very carefully staged month-to-month program of quantitative easing that allows Ben Bernanke and gang to call of the program if the economy starts to pick up speed.
Related Articles on STOCKS
As the world faces an increasing onslaught of new threats from biological and chemical weapons, viru...
Hologic (HOLX), a leading provider of mammography equipment and diagnostic services for obstetrician...
International Game Technology PLC (IGT) designs, manufactures, and markets electronic gaming equipme...