With the US markets heading into the Thanksgiving holiday tomorrow, there is a flurry of activity on the cards today. The economic data stands out, with the final estimates on the third-quarter GDP expected.
Besides the GDP report, we are also awaiting the durable goods order figures.
And in addition to these two main releases, a number of secondary data will also be coming out. Therefore, we are in for a busy afternoon when the US markets open!
GDP on Track to Miss Trump’s Target Growth Rate
According to economists, expectations are for the third-quarter GDP for the period ending September 2019 to remain at 1.9%. This will be an unchanged print from the second estimates.
The growth rate of 1.9% in the third quarter marks one of the slowest paces of growth in recent times.
The slowdown is attributed to a number of reasons including cyclical changes to the economic cycle. However, worsening the conditions was trade uncertainty.
The exception is that if the GDP surprises to the upside, there could be a bit of a reaction. However, it is unlikely to see growth rising above 2.5% for the moment.
Economists and monetary policy members have been widely anticipating the slowdown in the economy.
Therefore, it wasn’t much of a surprise to many. The Federal Reserve also responded by cutting interest rates three times during the course of the year.
However, it now expects that the current low rates to be enough to revive the economy in the near term.
This comes as the Washington administration predicts a 3.2% growth rate in 2019. The administration was also pinning hopes that US economic growth would remain above 3% for the next five years.
The United States and China have been locked in a trade war with each other. This has led to deteriorating sentiment in the markets and it has hit global trade as well. From a trader’s perspective, today’s GDP report is unlikely to have much of an impact.
US Durable Goods Orders to Remain Mixed
Growth in the third quarter was hit by other reasons as well. The large strikes at General Motors which saw tens of thousands of workers staying off work during the two weeks in September had a major impact.
Besides this, Boeing’s grounding of 737 jets also significantly contributed to lower growth figures.
Durable goods orders for October are forecast to show a 0.5% decline. This comes on the back of a 1.2% decline in September. Core durable goods orders, however, could rise by 0.2% on the month. This marks a modest improvement compared to the 0.4% decline earlier.
While there is an expectation for a modest improvement in the figures, the overall demand for long-lasting goods remains subdued. The expectations for an increase in the core durable goods orders come thanks to the prediction of increased demand from military aircraft.
The rebound in durable goods also comes as firms prepare for the holiday season ahead. This could give a temporary boost to the headline figure. Yet, still, the overall picture remains consistent with that of a weak growth patch in the final quarter of the year.