|Dow||+221.11 to 17,195.42|
|S&P 500||+12.35 to 1,994.65|
|Nasdaq||+16.91 to 4,566.14|
|10-YR Yield||-.018 to 2.305%|
|Gold||-$26.60 to $1,198.30|
|Crude Oil||-$1.14 to $81.06|
We got our first read on third-quarter GDP growth today — and boy were the numbers strong! The U.S. economy grew at a 3.5 percent rate in the third quarter, well above the 3.1 percent rate that was expected.
Digging into the numbers, you see that strong exports, higher-than-expected government spending, and decent household spending boosted the number, while inventory reduction hurt it. A better trade balance between imports and exports boosted growth by 1.3 percentage points, while inventory shrinkage lopped 0.6 points off of it. Consumer spending added 1.2 points.
Now get this: We already knew GDP grew 4.6 percent in the second quarter. So if you look at the combined performance over the last six months, you find the U.S. economy hasn’t grown this fast since 2003! That’s 11 long years ago!
|The rich have gotten richer — with the one-percenters getting a lot richer.|
But is that how it really feels in your neighborhood? At your job? Or in your portfolio? Do you feel better now than you did back in 2003, when the housing boom was just getting going and we were coming out of the 2000-02 tech wreck?
I don’t get that sense, at least not from the comments I’ve seen. The economic data also suggests this has been an incredibly uneven recovery. The rich have gotten richer — with the one-percenters getting a LOT richer.
But Main Street America?
The wealth doesn’t seem to have “trickled down,” to use an old 1980s term. The Federal Reserve itself found in a recent study that the gap between the rich and the poor got worse during this recovery, not better. That’s bitterly ironic, considering the Fed’s own policies have made things worse!
|“The wealth doesn’t seem to have trickled down.”|
So what I want to know is this: Do you think we’re in a 3.5 percent growth economy? Is this the best the economy has been in 11 years? Or do you see things differently in your own life? What about your portfolio — is it spinning off the kind of wealth it did back then, and how is that impacting (or not impacting) your daily life?
You know what to do — hit up the Money and Markets comment section and get the conversation started.
|Our Readers Speak|
QE is dead! That much is official, at least here in the U.S. And boy did you have a lot to say about that.
Reader HGS said: “As the Federal Reserve stops buying debt and other ‘liquid’ assets like MBS, the Fed is now pushing all this onto the banks risking a total meltdown of the financial system much worse than the 2008 credit bubble.”
Reader Anthony G said: “QE was all for the bankers. It was harmful to the real economy. This switch is also for the boys at Goldman Sachs. Only nature is on the side of the masses.”
And Reader Fred said: “Governments and economists are horrible at predicting and managing economies. Moscow had five-year plans that never worked. No more than two or three of the economists in this country predicted the 2008 bust. And no more than that will get the bigger one coming.”
Reader Joan also weighed in on the negative impact of QE, saying: “As far as I can tell, it just sank the middle class. Savings rates sank from 5 percent-plus to zero and stayed there for six years. I went from middle class to poverty as a result in my retirement year.
“The Federal Reserve meddling has been nothing but disaster for anyone without significant assets in the stock market. Those academic fools and madmen/women should be fired.”
Clearly, QE doesn’t have many fans at Money and Markets — and I’m no fan either! We should have canned the policy a long time ago, but like they say, better late than never!
Any other thoughts on QE, the Fed, or the post-QE market environment? Don’t hesitate to share them here!
|Other Developments of the Day|
Russia’s air force is getting friskier, according to the North Atlantic Treaty Organization (NATO). They’re increasing aerial maneuvers in Europe and adjacent waters and otherwise pushing NATO’s buttons in the wake of President Vladimir Putin’s Crimean and Eastern Ukrainian gambits.
Speaking of Europe, I’ll be there next week presenting my views on the economy and the markets to readers of the German-language version of Safe Money Report. It isn’t cheap to get there anymore … but apparently, discount airline Wow Air wants to change that.
If things go according to plan, you’ll be able to fly to London or Copenhagen from a couple of U.S. cities for only $228 early next year. There will be restrictions and fees for things most discount airlines charge for, but that’s still a great deal!
I moved on to football season long ago. But it’s worth mentioning that the San Francisco Giants beat the Kansas City Royals in the World Series yesterday. That’s good for three championships in just five years.
Until next time,
P.S. Martin wants to make sure you take some time to check out his Ultimate Portfolio. To take advantage of the New Member Discount you must join by no later than Friday, November 7! You will save $903 on one year and $2,403 on two years. Click here for details!