The US Q3 GDP came out at 1.5% yesterday, inline with what I predicted here. And that was the only good thing about it.
Q2 GDP was 3.9%, which was an outlier for the last 7 years of sub 3% growth, and was based on huge inventory build. That growth appears to be not sustainable now.
The fact that the largest economy in the world yo-yos back and forth on growth speaks volumes on the state of the global economy. There is no sustainability.
Also almost a third of the growth of last quarter came from people paying more for health care. A little over 30% can be attributed to increased ObamaCare premiums.
If we could put all the extra fees and charges we are hit with into the GDP number, then The US would be growing at an 8% clip, LOL.
So Janet Yellen & Co. certainly knew the paltry GDP number on Wednesday when they said rates would remain at zero bound, but suggested that December’s meeting was in play.
By posting a 1.5% growth, how in the world can you fathom raising rates anytime soon? Especially just prior to the holidays and year-end window dressing by traders?
It can’t and it won’t happen. I guarantee it.
As I have said prior, we have an all-clear on rates staying low until June of 2016. And perhaps further but my crystal ball gets a little foggy after that.