Two closely monitored GDP models published by Federal Reserve regional banks on Friday paint a distinctly different picture than the record high in the stock market, let alone the recent comments by President Donald Trump.
Wall Street firms are generally cautious about the fourth quarter. Goldman Sachs, for example, diminished its fourth-quarter GDP estimate on Friday, but only to 1.9%.
Still, these Fed GDP models suggest that the US economy is barely growing at all during this quarter. And when growth slows down, it makes the economy more prone to a negative shock that could tip it into recession.
Trump says the economy is & # 39; BOOMING & # 39;
Contrast all of this with Trump's recent comment.
"Economy is BOOMING," Trump tweeted Tuesday. "Seems to have another record day!"
Jerome Powell, chairman of the Federal Reserve, had a different impression.
"Look at today's economy, there is nothing really booming that can change," Powell told lawmakers Thursday. ] very hot.
GDP growth slowed to 1.9% during the third quarter, down from 3% growth at the beginning of the year. Although consumer spending is still solid, the industrial sector is contracting, and business spending has fallen for two consecutive quarters. This weakness has been fueled by the US-China trade war and slowed global growth.
Extreme greed is back
Still, investors are very bullish right now and are betting that the worst of the economic downturn may be over by the end of the year. Wall Street can live with a weak patch of growth, as long as it doesn't get any worse.
The recent record string in the stock market – the Dow, S&P 500 and Nasdaq all touched on Friday – has been fueled by hopes of a tentative US-China trade deal and easy Federal Reserve money.
CEOs are nowhere near as euphoric.
"If you just go around the world right now and look at what's happening in Hong Kong, you look at the Sino-US trade situation, you look at what's going on in DC, you have Brexit, you & # 39; has got uncertainty in Latin America, "Robbins told analysts during a conference call. "There has been a lack of clarity for so long that I think it finally just came into play."