CapitalistMarks

GDP at 3.5%!

Posted on 29. Oct, 2009 by scott in economic daydreaming, markets

Aha!  GDP was reported up 3.5% for the third quarter, even better than then 3.3% that economists had expected.  Sounds pretty awesome.

It is too.  But, you would expect the markets to be up 3.5% as well.  Yet, they are reacting with a rather muted rally right now of about 1%.

I am watching a ‘lively’ debate on CNBC right now and while larry Ludlow is effusive with his optimism the ’smartest’ guy on the show, Rick Santelli,  is more reserved in his estimate of the positive influence this news might bring.  Their economist, Steve Liesman (often a voice of reason) is sorta positive but like most economists he hedges his position.  It all leaves me kinda cold.

If the bulls are right we will see a further sharp upturn in economic indicators and super-duper follow-on in the markets.  If the bears are right this news will be digested by investors with some skepticism since the #’s were so heavily influenced by the ‘cash for clunkers’ and ‘1st time homebuyers $8,000 incentives’ and the markets will drop.

Watch the markets for the next week or so.  If the rally continues then there should be opportunities for short-term investment (at least until the Christmas sales #’s are revealed).  If the rally fizzles then I would expect a further significant decline into the Christmas season.

As to the economy?  Unemployment still reigns supreme when considering the future.

Don’t get me wrong, I think a 3.5% GDP growth number is wonderful and I really do hope there is positive follow-on.  However, I am one of the skeptics and am not ready to jump into the markets or start a new business until I see more ‘proof’ that this can continue.

thanks to flikr’s ocean yamaha for the photo

Tags: gdp 3.5%, market reaction, recession over?