GDP Revision

by Jay Pestrichelli on August 29th, 2013

This morning it was released that the US economy grew at a faster pace and revised the GDP number up to 2.5% from the 1.7% previously reported. You can read the details in the Wall Street Journal article by clicking here

The write up details that corporate profits rose 2.6% and exports rose by an annual rate of 8.6%. The impact of the sequester could be seen in the data as government spending dropped by 0.9% in the second quarter.
The rise in stocks this morning leads us to believe the market has interpreted this number in what I would call a Goldilocks range; not too hot and not too cold.  The revised data point is still low enough to prevent an early exit of the QE program, but still positive to justify the fast growth in stocks.  The Fed hasn’t actually picked GDP  as one of the factors it would consider before adjusting current policies, but it is one that could help provide insight to the unemployment rate.
Next Friday we’ll get the August jobs number and unemployment rate data. Unless you’re short, most market participants are likely looking for the same kind of Goldilocks range of not to good and not too bad, so keep an eye out for that.

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