Economic Updates

There are a few updates I wanted to pass along this morning. The first is that trading will close at 1 pm today. There’s no trading tomorrow.

On Friday, the government gave the second update to Q3 GDP. The U.S. economy grew by 3.4% during the third quarter. Towards the end of January, we’ll get the first report on Q4. Wall Street expects something in the mid-2% range.

Also on Friday, the government said that consumer spending rose by 0.4% in November while personal income rose by 0.2%. That tells me that Q4 looks pretty good.

There was also an unusual story this weekend that President Trump was discussing firing Fed Chairman Jay Powell. I’m not a lawyer but my understanding is that that is legally ambiguous. I know many presidents have thought about it, but none have tried.

More importantly, I don’t think firing Powell would make a big difference. The last rate increase was approved unanimously. Also, President Trump nominated Powell to the Fed chair last year. It would seem odd to want to get rid of him so soon.

(Technical note. There are two nominations. One is to the Fed Board which Powell had already been a member of. The nomination as Fed chair is separate. So even if Trump could fire Powell as Fed chair, he could still remain on the Fed board.)

On Friday, the S&P 500 closed at 2,416.58. That’s the lowest close for the index since July 6, 2017. In the last 13 trading sessions, the index has plunged 13.4%.

Posted by on December 24th, 2018 at 10:27 am


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