Is GDP growth indicative of a growing economy?
by Sing Koo, Oct 27, 2022
GDP growth is indicative of a growing economy? If so, where is the recession. Market is celebrating and wishing the inflation to go away so that CB may slow down rate hike. But that is just wishful thinking. Is this GDP growth a lagging indicator for inflation and a leading indicator for recession?
ELAINE analyzed an article from WSJ "U.S. Economy Grew 2.6% in Third Quarter, GDP Report" and found the following key focus:
"Gross domestic product - the broadest measure of goods and services produced across the nation - increased after declining in the first half of the year, the Commerce Department said Thursday. Consumer spending, the economy's main engine, cooled from July to September compared with the previous quarter"
"Some economists prefer to look at final sales to private domestic purchasers - a measure of consumer and business spending - rather than the total GDP number, as a gauge of underlying demand in the economy"
With the bullish narrative from consumer credit, the conservative posture on RWA and CECL taken by major banks, weak signals coming from consumer staples, reduced shipping volumes, slow down in manufacturing and in the absence of retreating energy price, it is confirming that there will be more economic pain down the road.
