Picking Up the Pace

Lost amidst the market turmoil this week were a number of reports of a strengthening US economy. Consumer confidence soared last month, as did new home sales. Durable goods orders surprised with a 2% jump in July, and personal incomes rose, and are up 4.3% over the past twelve months. 2Q GDP was revised sharply higher, from a 2.3% annual growth rate to 3.7%. This pace is above the 3.2% quarterly average over the past 65 years (see Graph below).

All major components of GDP were revised higher, indicating broad strength in the economy, with business investment particularly strong. In contrast, the European economy crept just 0.4% higher last quarter, while Japan’s actually contracted by 1.6%. China grew at a 7% pace in the second quarter, or so they say.

While there is a lot to worry about in the world, that’s really always true. The risk of a recession in the US is very low, and I just don’t see a collapse in equity prices. Volatility, to be sure, but the US economy is growing and monetary remains accommodative. So we stay the course.

• 26 Feb, 2015

  Not Deflation

  The Consumer Price Index dropped 0.7% in January, bringing the year-over-year change to negative 0.1%. With the ...

• 29 Jun, 2017

  Humans! What Are They Good For?

  It looks like the world is turning against humans. Ive talked before about the rise of robots in manufacturing (2016 ...

• 28 Jan, 2026

  Fireside Reading

  With most of the country confined to home by snow and ice, I thought you might appreciate some more book recommendations ...