Tomorrow’s GDP number likely to move the market but up or down?
When you’re making up your list of market-moving events, don’t forget tomorrow’s (January 29) release of the first take on fourth quarter U.S. GDP (gross domestic product). Economists are looking for strong 4.6% growth in the U.S. economy to end the year.
Anything less would be a market-moving disappointment. Anything more, as I read the way the numbers are being framed on Wall Street, would only be moderately reassuring since the consensus view is that the economy is set to slow in 2010 from the fourth quarter growth rate.
Still, those of us who are long stocks would certainly prefer that GDP growth come in at 4.6% or better. (The Bureau of Economic Analysis is scheduled to release the data before the stock market opens at 8:30 ET tomorrow morning.)
So what are the signs? The numbers in today’s release on U.S. durable goods (stuff that lasts a while and isn’t destroyed by use such as cars, washing machines, and air planes) orders were a mixed bag. Durable goods orders increased 0.3% in December but the consensus was looking for a 2% increase. Excluding transportation goods, orders jumped 0.9%. The consensus was looking for a 0.5% increase.
Shipments were up 2.9% in December. That’s usually a positive indicator for GDP growth. New orders for nondefense capital goods (excluding aircraft) climbed 1.3% in the month. Rising orders for capital goods usually reflect rising business investment. The 1.3% increase in December comers on up of a 3.1% increase in November.
A good-sized increase in business investment would be a sign that companies are seeing signs of a pickup in their business in 2010. And when capital goods investment rises, increase hiring usually isn’t that far behind.
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I am guessing that we will start up, then rumors of greece default will bring us down, then back up, then back down, then up again. China will then say that they will be tightening some more, and the market will go down. Then back up….
(Really just wanted to see if I could post….)
DJ shoots, AND SCORES!
Speaking of sports analogies, I would be betting the “under” on that 4.6% number. I think we’ve seen enough earnings reports to know that gross sales were down overall for the quarter as a whole.
Although I’ll be happy to be wrong.
In last nights SOTU address, Obama said he wanted us to be better at exporting goods (I think that’s what he said). If so, does this mean that he will back a monetary policy of a cheaper dollar? If so, does this mean gold will go up?
dflynn,
You bring up an interesting contrast in two of the things the president said. If he wants a cheaper dollar, all he has to do is keep spending like Imelda Marcos in a shoe store. However, he said he wants to limit spending (yeah I know, I don’t believe it either!).
Since the government has yet to do anything to improve our ability to export (I think we have had trade deficits at least since the 80′s), I don’t really put much faith in Obama to change decades of government incompetence in this area.
Regarding gold, as long as the Fed keeps blowing bubbles, gold might have a roller coaster ride.
I am afraid the only export this administration is going
to double in the next 5 years is the jobs market….
See I told so. Last night’s speech was nothing.
Starting with Obama and down to each senator and congressman, their only interest is the upcoming election. It is all posturing and every idea is half baked and ill formed. Nothing that they have done is ever well thought, efficient or complete. Atleast the fed acted with conviction.
Tax the banks at this juncture?!! First lend them money at 0% so they can lend. But why lend – when defaults are at their peak. So beg and cajole them to increase lending, then ask then to increase the capital ratios. Then decide to tax them even more!! – because the basket cases like GM and AIG cant pay back their TARP. Hey, make up your mind, how you want to help this economy or is everything all about getting elected?
Well…3 for 3 1. Bernanke 2. State of Union speach (I think that was one of them) 3. GDP. We’ll see if this Friday’s pre-market voo doo takes hold of the traders & investors.
> Tomorrow’s GDP number likely to move the market but up or down?
Nowhere.