No, GDP Didn’t Jump “33.1%” in Q3, But 7.4%, after Plunging 9% in Q2: Time to Kill “Annualized” Growth Rates. Imports, Powered by Stimulus, Dragged on GDP

GDP back to Q1 2018. Worst ever “net exports.” The decline in government spending was also a drag. “GDP per Capita” bounced back only to 2017 level.

By Wolf Richter for WOLF STREET:

The spectacular spectacle of an absurd creature called the “annualized” growth rate of GDP appeared again this morning, and the headlines screamed that GDP, adjusted for inflation, surged by a record of “33.1%” in Q3. On the face of it, this would mean that the economy increased by one-third from Q2. But that’s the magic of “annualized” rates. And it’s time to kill them in headline reporting.

That “33.1%” reflected the jump in Q3 from Q2 but roughly multiplied by 4 to produce a theoretical figure of what GDP for the whole year would be if it kept surging four quarters in a row like this. And that’s not going to happen, just like the plunge in Q2 wasn’t actually “31.4%” and wasn’t repeated four quarters in a row. Deeper down in its GDP report this morning, the Bureau of Economic Analysis also reported “not annualized” figures. And not annualized, GDP jumped by a record of 7.4% from Q2, after the record 9.0% plunge in Q2 from Q1:

Both the jump in Q3 and the plunge in Q2 were the sharpest moves ever in the quarterly GDP data, which began in 1947. Before then, there were only annual data.

And we faced another “annualized” figure in today’s GDP reporting: that GDP in Q3 was $18.58 trillion “annual rate” and “seasonally adjusted” and “in 2012 dollars.” These “2012 dollars” are used to adjust for inflation (loss of purchasing power). And so these terms show how far economic activity dropped in Q2 and the partial bounce-back in Q3. This measure of GDP puts it back where it had first been in Q1 2018:

But the US economy isn’t actually that big. This “annualized rate” is roughly 4 times Q3 GDP expressed in 2012 dollars (adjusted for inflation in that manner).

Actual or “nominal” GDP in Q3 in “current dollars” (not 2012 dollars and therefore not adjusted for inflation) and not annualized, was $5.32 trillion.

Nominal GDP for the entire year of 2020 will be a little over $20 trillion — unless something big and bad happens to economy in Q4 — and will still be down from nominal GDP in 2019 of $21.4 trillion.

And no, consumer spending didn’t soar by “40.7%” in Q3. That was another absurd “annualized” growth rate. Consumer spending jumped 8.9%, not annualized, in Q3 from Q2, after having plunged 9.6% in Q2 from Q1.

In dollar terms, and adjusted for inflation, consumer spending bounced back to the level where it had first been in Q2 2018, to $12.92 trillion in the inescapably seasonally adjusted annual rate expressed in 2012 dollars:

Consumer spending accounted for 68% of GDP in Q3. The bounce-back in spending was driven by stimulus and extra unemployment benefits. Not all of this money has been spent in Q2 and Q3, and some of it was used to pay down credit card balances, thus giving these consumers more room to spend in Q4.

Consumer spending includes retail spending, which has soared to record highs under the stimulus money and booming ecommerce sales. But it also includes services such as rents, healthcare, insurance, airline tickets, lodging, etc., which combined are far larger than retail, and some of these services, while also recovering, are still deeply in the hole, particularly the travel-related services.

Gross private domestic investment – includes investment in residential and non-residential structures, equipment, and intellectual property products such as software – also bounced back, to Q3 2018 levels of $3.37 trillion seasonally adjusted annual rate:

Imports were a huge drag on GDP. (All figures in 2012 dollars, seasonally adjusted annual rates.) Imports soared by $465 billion in Q3 from Q2, to $3.18 trillion, fired up by stimulus payments and extra unemployment benefits, and by rent and mortgage payments not-made, that consumers spent on imported goods.

Exports also rose, but not nearly as much (+$236 billion) and from a much smaller base, to $2.17 trillion.

So, “real net exports” of goods and services (exports minus imports, the trade deficit) in Q3 hit a negative $1.01 trillion, an all-time worst, 30% worse than in Q2, and 6.4% worse than in Q3 2019.

Negative “net exports” act as a reduction of GDP. In other words, the portion of the stimulus that was spent on consumer goods that were imported, or whose components were imported, stimulated the economies of China, Germany, Mexico, Bangladesh, etc., and acted as negative for the US economy, thank you hallelujah stimulus:

Government consumption and investment declined and dragged on GDP. (All figures in 2012 dollars, seasonally adjusted annual rates). Consumption expenditures and investments by the federal government in Q3 fell by $22 billion from Q2, to $1.34 trillion. State and local government cut their consumption expenditures and investments by $17 billion to $2.0 trillion. In total, all government levels combined, this component of GDP fell by $38 billion to $3.33 trillion:

And for your amusement, GDP per capita, which reflects the slice of the economy per individual, bounced back only to $56,252 (in 2012 dollars, seasonally adjusted annual rate), not even the Q4 2017 level, and still down 3.4% from a year earlier:

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  67 comments for “No, GDP Didn’t Jump “33.1%” in Q3, But 7.4%, after Plunging 9% in Q2: Time to Kill “Annualized” Growth Rates. Imports, Powered by Stimulus, Dragged on GDP

  1. TimTim says:

    They’ll just say you are a party pooper….

    Until their shit hits the fan.

  2. andy says:

    I say we borrow 5-year plan from Chinese central planners, and multiply GDP print by 4 quarters times 5 years. Winning!

    • Lynn says:

      Aren’t “we” already doing that? “We” are inflating residential RE prices to “support the country’s economy”.

      • Joe Saba says:

        you mean local/state/fed tax REQUIREMENTS

        utilities/property taxes/fees have exploded over past 10 years

        10%+++ annually since 2000

        • Yort says:

          I believe we are entering a period of global stagflation (high inflation with low “real” growth). I feel your pain Joe on property taxes, fees, insurance, etc. Here are a few personal examples:

          Farm land – 376% property tax increase in 5 years
          House – 58% property tax increase in 10 years
          House Insurance – 130% increase in 10 years
          Misc other Insurance – 87% increase in 10 years
          Health Insurance – 289% increase in premium in 10 years

          The real concern is that the examples I listed above are relatively high value ‘percentage’ tax increases on already high nominal value previous ‘total’ tax amounts. The healthcare monthly premium alone is $10,332 more per year than 10 years ago. Big numbers, with big percentage increases, are a toxic mix to say the least. It is not such a big deal when my Netflix goes up 6.8% per year (from $16 to $18 from January 2019 to today’s $2 increase just announced). If the same rate of Netflix subscription premium applies over the next 10 years, it goes from $18 to $30/month, so $144/year more. Thus $144/year is a small ”total’ number compared to $10,332 more per year for healthcare premiums. Yet what becomes even more toxic is when virtually everything goes up two to three times more than income/wages. The future generation is going to have to simply “opt-out”of this inflation trap, once the majority reaches “peak debt”. I suspect I am not the only one who believes this “hidden yet not hidden” unhealthy inflation rate on essential goods and services can not last much longer. At some point enough people are going to “opt-out”, and the few remaining tax and labor “mules” are going to have to pull the tax and labor carts for those who simply gave up. Perhaps once Bezos hits $1 trillion net worth in a few short years, he can pay for everyone else…HA

  3. Harrold says:

    If you go down 33% and back up 33%, your still down 11%.

    • Don says:

      In America 2+2 = something other than 4. So your argument doesn’t apply.

    • Nacho Libre says:


      Math is right.

      But seriously, how many of you expected this bump?

      Wolf, for one has been on record saying he is short on everything this year.

  4. abby vluk says:

    GDP per capita, as it relates to Treasury yields, presents a far more realistic story, which connects current debt to less future value.

    • Old School says:

      My understanding is the nominal long term growth in SP500 revenue is 3.6% which is very close to long term nominal GDP growth. You are not going to have trillion dollar stocks grow to the sky when the pie is only growing 3.6%. And the SP500 isn’t going to grow much if at all the next 12 years since it grew at 12% or so the last 12. The bubble just can’t get that big.

  5. Michael Gorback says:

    Just wanted to say a simple “thank you” for this post.

    You can prove anything with statistics as long as your audience doesn’t understand statistics.

    • Andre says:

      Lies, damned lies, and statistics – › wiki ›

      “Lies, damned lies, and statistics” is a phrase describing the persuasive power of numbers, particularly the use of statistics to bolster weak arguments. It is also sometimes colloquially used to doubt statistics used to prove an opponent’s point.

    • Paulo says:

      Yes, excellent post.

      This: Consumer spending accounted for 68% of GDP in Q3.

      And most of the was from stimulus and unemployment benefits,

      Just think how great the stats will one day be when UBI is introduced?

      • Seneca's cliff says:

        This stimulus based economy is a lot like a cyclist who is half way through the Tour-de France and his team runs out of food. So he attempts to make it to the finish consuming nothing but Caffeine, Speed and Red Bull. He might make it, but he might not be fit to cycle ( or do anything else) again.

        • josap says:

          Stimulus is over. We all know what happens next.

        • Thomas Roberts says:

          Seneca’s cliff,

          All three major world economies are running on debt nonsense (America,EU, and China). I don’t expect China to last much longer at the current rate. If America can outlast the EU doing this, it’s possible that the dollar, would be strong that new US bonds, would always pay a negative yield, which would either shrink the debt over time or give a free amount of money into the US budget each year. If fiat in general collapses (unlikely), then the debt doesn’t matter much either way.

          It still would of course, have been a lot smarter to have a better run non-debt economy.

    • 91B20 1stCav (AUS) says:

      Michael-other than it’s hard enough now to effectively teach arithmetic and then ‘math’ematics to the public (they are not the same, current popular usage of the terms notwithstanding), it makes the case for statistics and their real-world meanings to be presented effectively, and as early as possible. (Wolf, yet again you bat 1.000!).

      may we all find a better day.

    • former says:

      Yes, annualized is so useful!

      I was walking only 5 minutes and I found 20$ on the ground.

      Annually, if I walk only 5 minutes per day, I can make over 7K!

  6. Lynn says:

    How does all this compare with China’s figures? I know the math is apples to oranges, but I’d expect their figures to be inflated as well. Anyone know?

    I’m hoping they won’t be in a better position to grab US housing RE again.

    • Russell says:

      All of the stimulus went to purchase goods made overseas. You tell me. The US needs to get back to manufacturing, NOW! No goods, services, other “soft” goods needed during COVID.

      • Lynn says:

        “The US needs to get back to manufacturing, NOW! ”

        Agree wholeheartedly.

        • 91B20 1stCav (AUS) says:

          Russell/Lynn-but are we at the point where ‘Muricans will work in manufacturing for Chinese, or the even lower SE Asian (future African?) wages??? Will that wage level allow the workers to afford that which is being produced? Will the constant expansion of automation govern how many of those type of jobs will even be available?

          may we all find a better day.

    • Thomas Roberts says:


      For China, they keep adjusting it, but, the current “estimate” is that by the end of 2020 the CCP “forecasts” the economy will be 2.5% bigger than the end of last year (2.5% annual growth). They already announced, they expect the economy to grow by 8.5% next year.

      This is of course is nonsense, but, nobody, not even the CCP itself probably knows anything close to the real number (it definitely shrank). The CCP continues to crack down on money leaving the country, however, because of infighting in the CCP, CCP members depending on their rank can get some money out. CCP officials even continue to shut down factories in China and place them elsewhere. Recently, China started building a border wall on the Vietnam border to prevent Chinese from fleeing to Vietnam for jobs.

      So as far as Chinese buying up real estate in America, it’s hard to say. There are 90 million members of the CCP and I imagine a large percentage (probably most) of Chinese buying foreign real estate are CCP members. The possible ban on CCP members immigrating to America could push them elsewhere or disbar them from purchasing. It’s well established that as trouble in China grows, CCP members will flee.

      • Lynn says:

        Thanks Thomas. All good to think about.

        The fact “Recently, China started building a border wall on the Vietnam border to prevent Chinese from fleeing to Vietnam for jobs.” may or may not mean much. I suspect the Chinese government cares very little about the little people economically- except to keep civil unrest at bay. Kind of like us, actually.

        Hopefully the ban on CCP members will stay- but I think it’s just driving that money underground in the US, really.

  7. MonkeyBusiness says:

    I am guessing we had to jump by 50 – 60% annualized to get back to our Q1 numbers.

    Come on shoppers!!! Buy now or have your savings be inflated to nothing.

  8. Anthony A. says:

    I just bought a new Motorola phone today ($175.00). That will help!

    Thanks Wolf, for the great work!

  9. Memento mori says:

    Talk about not letting a crisis go to waste.
    When history will look back at this period, it will be defined as the time of the Grand Theft.
    There was such an overreaction into throwing trillions without accountability that any credibility of respect of law and value of money will be hard to recover. There was an article on Bloomberg today detailing how billions were siphoned away from PPP by scammers.
    Those that weren’t siphoned by scammers were given to companies that didn’t need it. Talk about taxpayers funding payroll for private companies with no strings attached. Two companies I know had access to such funds, one 400k the other 600k, they didn’t need it as their business wasn’t impacted at all, if anything it’s booming, yet when you talk to owners, it’s free money for them that they invested in the stock market, hoping it will completely forgiven.

  10. Net exports is creepy. The dollar is making a bottom here perhaps. One can only gather there will be market for all those treasuries through BIS, assuming China, et all want them for reserves. Wonder how much pumping oil back up to $40 has hurt that market

  11. DR DOOM says:

    This is tongue in cheek ,Wolf, you would be tarred and feathered and ran out of DC on a rail if you were in charge of reporting GDP. Bad Wolf.

  12. Seneca's cliff says:

    Without the crazy statistical games it certainly makes no sense. The travel and tourism industry is toast, aircraft manufacturing is in the toilet, restaurants are at 50% at best, pro sports are off by a major percentage and higher ed is off by 15-25% and they expect us to believe that we have made up for all that buying toilet paper office supplies and a few extra bikes.

  13. MonkeyBusiness says:

    Amazon, Facebook crushing earnings, but shares barely budging. Might be top of the market here, people. This is despite Amazon guiding sharply higher

    I continue to be comforted by the fact that President Bezos will continue to provide for the United Shoppers of America.

    Doesn’t matter who “wins” Nov 3. President Bezos is the real Prez. Give him an Air Force One already.

    • Jonas Grimm says:

      Screw it. Give him a crown. Might as well given how little Americans actually seem to care about practicing and upholding democratic values. King Bezos, first of his name, long may he reign!

    • SocalJim says:

      If the pres wins re-election, which is possible, AMZN, FB, and TWTR are in for a world of hurt. Could be looking at the big short.

      • MonkeyBusiness says:

        And if it’s the other way around, people shorting will be in for a world of hurt.

        Best is to just sit out this one.

        • SocalJim says:

          It is a game of probability. If a clear Biden win, you are right. Odds of that are 1/3rd. But, the odds of a clear Trump win is 1/3rd. The odds that the election is close enough to get fought out in court, which is stacked with conservatives, is another 1/3rd.

          The big short works in a clear Trump win and also works in a court fight. So, 2/3rds chance the big short is a winner.

        • MonkeyBusiness says:

          Not sure if it’s the proper odds though. I mean if you believe the polls (which I don’t), then the odds of Biden winning is bigger than 1/3. I mean doesn’t Nate Silver have the odds at 80 something percent Biden?

          I don’t want to turn this into a political discussion, just saying that the odds aren’t that clear cut. There’s also the payoff for each odds. I am just not savvy enough to compute those.

      • Yort says:

        A real concern of mine is that there is a very decent chance that we do not know who wins until Jan-Feb 2021, and that the supreme court will have to make a subjective choice that might exclude the wish of the voters. What we have is two tribes, both of which exhibit cult-like-groupthink, both of which are somewhat blindly confident their side “wins”. So I’d assume that we are going to have at 60-80% of the population both confused AND angry with a contested election. A lot of minds smarter than mine think the same outcome may happen. That is why Walmart stopped selling guns-n-ammo today (search CNBC article (“Walmart pulls…”civil unrest”). Not attempting to scare anyone, just understand it is not a low probability event so “if” it does happen, you can be more logical and less emotional when making decisions. The future is not so scary when you can predict a glimpse and formulate a logical plan. Election night and the following weeks could unleash a lot of pent up “animal spirits”. Time moves forward regardless so I suspect it will be a few “hot spots” and somewhat a non-event. The Earth would be boring without humans…HA

        • Dan Romig says:

          ‘Cult of Personality’ -Living Color

          “Look in my eyes, what do you see?
          The Cult of Personality
          I know your anger
          I know your dreams
          I’ve been everything you want to be

          I sell the things you need to be
          I’m the smiling face on your TV
          I’m the Cult of Personality
          I exploit you
          Still you love me
          I tell you one and one makes three
          I’m the Cult of Personality

          You gave me fortune
          You gave me fame
          You gave me power in your God’s name
          I’m every person you need to be

          (Ask not what your country can do for you…)

          (The only thing we have to fear is fear itself!)”

          Humans are tribal. Mobs feed off that. I sure as hell saw “cult-like-groupthink” in Minneapolis this summer. In four days, it will be the first Tuesday of November in a year divisible by four.

        • WyleeEconomist says:

          Trump definitely has a Cult, it is evident in how badly he treats his own base… and yet they keep begging for more.

          Who is the Cult leader on the left?

          Those who voted for HRC don’t like Biden (they wanted her to run again).

          The Actual left of Democratic Socialists and BLM are certainly holding their noses to vote for Biden.

          There is a HUGE list of reasons to vote against Trump. The only good thing Trump ever did was pull the US out of the TPP and he only did that out of spite for HRC & Obama.

          The US is in a terrible place politically.

          If Trump wins, we are on the highway to Theocractic Facism. While Trumpsters think this is going to be great for the market… Trump is making it clear he is going to use his corrupt judiciary to attack his enemies likes Google, Facebook, and Amazon which is going to throw the market into a tailspin and cost the US it’s reserve currency status…. Which will cause the debt to explode along with any ability to govern the country.

          If Biden wins… He is going to be vilified by the right… the actual left is gonna fight his neo-liberal policies constantly.

          Ironically, he is the best the choice for Wall st status quo warriors… He is going to keep stimulating Wall st vs main st. He is going to end the anti-trust cases against big tech… Sure the debt will still explode :D But at least Wall st gets a smooth ramp up.

          Settle in for another 4 years of grid lock….

          If Biden is as impotent as I think he is going to be… Expect the Tom Cotton/Tucker Carlson ticket to throw us into full a unashamed Theo-Facist state.

        • Lee says:

          You people in the USA could learn how to run elections and voting from Australia:

          1. We have EVERYBODY enrolled to vote when they reach voting age. The government actually sends out the information to people to get them enrolled.

          Of course that assumes that the person getting the material can read and write well enough to understand the stuff which is a big problem in the big cities in the USA.

          2. When you move you have to inform the government of your new address if you have a driver’s license and IIRC this includes the electoral commission .

          3. If you DON’T VOTE in any election without a valid reason such as not being in the country and INFORMING the electoral commission of the fact you will get fined.

          Yes, we have mandatory voting.

          4. You can request and get an absentee ballot if you are not going to be able to go to the polls on voting day which are always on Saturdays.

          5. Unlike in the USA people here are basically honest and civil. We don’t have ballot harvesting, throwing away ballots, and dead people voting like in the USA.

          6. When it is time to vote you go to the nearest polling place which can be a place like the local school or hall, state your name and address and then they will ask if you have already voted. Of course, if you haven’t you say, “No’, and get a ballot paper. They mark you off on the enrollment book.


          In the case of a Federal election you get one for the House and one for the Senate. I won’t get into all the details about the ballots, but you mark your choices and then put them in the ballot box.

          No riots, no looting, no demonstrations.

        • Lee says:

          “The only good thing Trump ever did was pull the US out of the TPP and he only did that out of spite for HRC & Obama.”

          Living in Australia and reading the local left wing rag and the comments in them, one would have thought that when Mr Trump won in 2016 that:

          1. There was going to be WWIII and endless wars. Sorry, but he is one of the few US Presidents not to start a new war.

          Just for that he should be re-elected.

          2. The USA was goingt o immediately go into a depression and the stock market was going to crash and neither would recover.

          Well neither of those happened, did they?

          3. The environemnt was going to look like something out of Mordor.

          That didn’t happen either.

          And for the rest of the post, well that is basically nonsense, as usual.

    • Why would he want that p.o.s. plane. He has fleets of aircraft. He already owns his own Air Force. He eats lizards.

      • wiley says:

        Mr.Australia,you dohave protestors,they get arrested,beat,fined for opposing Martial Law.Oldbiddies on parkbenches get harassedbystormtroopers because they”re not allowedtoRest.Dronessurveil and enforce Lockdown,stormtroopers bust into bloggers”buildings and take them away for trying to encourage Aussies to protestthe Ungodly/Inhumane conditions.I think you”ve Stockholmsyndrome and don”t know u live in a Corp. Registered with America”s S.E.C.Fact!Do your research.

  14. NARmageddon says:

    I think I may have asked this question before, but would not GDP-newdebt be a better measure of real economic activity than plain GDP?

    • Or GDP to monetary base. If that were the measure since 2007 GDP would be negative.

    • BuySome says:

      I’m thinking some relationship to total transport mileage accumulated. Then we would know if all this moving about was resulting in anything better. Or how about some measure of communications useage…the electrons wasted meter.

    • Wolf Richter says:

      N-yes. Because economic activity is economic activity (measured in how much money changes hands), no matter where the money comes from (borrowed or earned). But in terms of sustainability of this economic activity, it would be a good measure. Debt-to-GDP is already a common measure of this, seen from other side, in terms of how sustainable the debt is given the economic activity.

  15. Wolf, I am good at math, but what was the Nominal GDP in Q1 and Q2 of 2020?? Adding this sum to Q3 of $5.32 Trillion will tell us what Q4 will have to be to get a full year 2020 of $20 Trillion, down only 6.5% from 2019’s $21.4 Trillion. But I think the year-to-year decline is much higher than that, but I guess 7.4% and 9.0% quarter to quarter moves are records, so that is an earth mover! This Q4 2020 plug number will also tell us how much Q4 must increase in percentage terms from Q3 to get to the $20 Trillion nominal GDP number.

    The Annualized numbers, as you plainly state, are just gumming up the comparisons. Question: How much did GDP decline in 2009 from 2008 and from 1930 from 1929, that and worse is what we can expect for the 2020 from 2019 annual total GDP numbers.

    Trip to Buffalo in February for anyone who comes up with these numbers, because we have cratered as an economy, back to Q1 of 2018 so we have lost almost two years of GDP GROWTH as of Q3, 2020. Need an aspirin.

    • Wolf Richter says:

      David W. Young,

      Excellent question. And you’re right… So here we go:

      Nominal GDP 2019: $21.43 trillion
      Nominal GDP 2020 Q1-Q3: $15.47 trillion
      Plug number 1: Nominal GDP needed in Q4 2020 to reach 2019 ($21.43 Tn) and to get to 0% growth not adjusted for inflation: $5.97 Tn

      Nominal GDP in Q3 2020: $5.32.
      Plug number 2: GDP growth in Q4 from Q3 needed to reach $5.97 Tn = 12.2%. Not very likely ????

      • Wolf, your roundtrip tickets to Buffalo (for two) for 2/12/21 are waiting at the Pan Am counter in San Fran, just watch your step getting there. Thanks for providing and pushing the numbers, and I almost bet that Q4, 2020 is going to be closer to $4.5 Trillion in nominal GDP, with Holiday spending a dud, so that we are still down at least 6.5% in total nominal GDP for 2020 vs. 2019.

        A counter-seasonal-historical decline from Q3 to Q4 because many Americans will no longer have Unemployment Benefits come 12/25/20, mortgage & rent forbearance programs gone by January, and the economic outlook by then looking pretty grim going into 2021.

        Hard to believe the Government numbers at this point. Big revisions to Q3 after the Election??!!

        • MonkeyBusiness says:

          Unemployment dropping month after month, economy seemingly improving big time. Without context, one would have thought that we are living in a booming economy!!!

  16. breamrod says:

    inflation numbers are cooked therefore GDP is cooked , hell everything these days is cooked. I still appreciate all of Wolf’s work!

  17. Michael Engel says:

    1) The DOW touched dma200, a lower low, below Sept 24(L) and bounced back up.
    2) SPX : today low was above Sept 24(L), before bouncing back up to close above yesterday close. It might be an important signal.
    3) Effort & result : today higher close confirmed yesterday Positive Reversal (PR) signal, a weak signal of 26TD. Please check it :
    4) Yesterday close was above Sep 23 close, but yesterday RSI was
    lower than Sept 23 RSI. OK. NDX daily : a similar PR signal !!
    5) If tomorrow SPX weekly close will be be above Sept 21 weekly close, yet tomorrow RSI still will be lower than Sept 21 RSI ==> a strong (5 weeks) Positive Reversal signal, if confirmed by next week close.
    6) Suppose tomorrow NDX will have a bearish day :
    7) If tomorrow weekly NDX close will be higher than Sept 14
    close, yet tomorrow RSI will be lower than Sept 14 RSI ==> NDX will generate a Positive Reversal signal, a medium strength (6 weeks) signal,
    if confirmed by next week close.
    8) Those are the two scenarios for tomorrow bearish or bullish day.
    9) NDX daily closed inside a flatbed cloud. // SPX daily closed underneath the cloud.
    10) NDX weekly above a flat bed, between T&K. K will cont to rise in the
    next few weeks, losing it’s lows. // SPX weekly(C) between T&K, but K rise will be more moderate, yet price might fall underneath T & K.
    11) Unless PR send SPX prices higher.

    • 1) Floor at NYSE is like Vietnam War; American forces control the countryside by day, VC by night. Overnight futures traders have a different agenda, “Day” traders put free Fed money to work, buy up the market by day, watch it collapse at night. Fed does an intervention, for their own good.
      2) Yields are backing up, dollar is backing up, and is now a counter indicator to stocks. That will change.
      3) Widening trade deficit means China will take more Treasuries in lieu of BIS, or maybe they will crack that nut once and for all and demand real dollars.
      4) Crude oil prices being held up by Fed cabal, will dive with the rest of the market sending OPEC + into paroxyms. Putin is thrust out as Central Asia boils over.
      5) World wide mass democracy protests extend to the US, Republican party disappears, Democrats splinter into moderates and progressives, rekindle rank partisanship.
      6) Corporate America tries to work with new regime, finds out socialism isn’t so bad.
      7) Right wing lobbies for gun control after violent ANTIFA groups threaten to purge America of any vestiges of former regime. Disarm them please.
      8) GDP is discontinued.

  18. nick kelly says:

    The problem with GNP is that there doesn’t have to be a ‘product’ to be added in. The word product implies something useful. The old term GNE or Gross National Expenditure was more honest. Money was spent, but there was no implication it had a positive result.

    The old sarcastic adage about ‘breaking windows’ to stimulate the economy via their repair actually came true in the UK a few years ago. It narrowly missed a predicted recession because it was a cold winter and fuel bills were just enough to push GNP positive.

    But obviously the economy would have been better off if the fuel bills were normal and a statistical recession did occur.
    If GDP is the measure. it isn’t necessary to break windows to stimulate the economy, just leave them open in winter.

    • NARmageddon says:

      See also my question above about what GDP would be if debt-enabled spending was not included. I;d say it is closely related to Nick’s point.

    • Old School says:

      GDP is a measure, but it’s got some problems reflecting quality of life. People in my area have large lawns and most pay a service or buy a riding mower and do it themselves. I like to push mow as it is a good exercise for a 64 year old. What I do in an hour the standard charge is $35. So four times that gets $140 per month. It saves me from going to the gym so say that is $60. So anyway that’s $200 per month that I am choosing not to pay. My costs to push mow may be $5 per month. It’s a lifestyle choice, but one choice contributes $200 to GDP and one $5. It’s a first world problem of course whether to pay or do it yourself.

  19. Fred Flintstone says:

    but but but…….when our executives use the same reasoning explaining earnings it seems to go so well. The nonrecurring recurring expenses that destroy book value but create income seem to go over very well.

    • Fred, and Wilma, I think we will see more executives wearing orange jumpsuits going forward, esp. in the banking sector. The Public is tired of being served last in the Federal Soup Line.

      • Paulo says:


        I don’t think many executives will be wearing orange jumpsuits going forward, even though I really hope you are right. Justice is all dependent on the lawyers one can buy, unless there is total outrage like a sex cult, or some ilk. Bankers? Didn’t happen in 09. Rob a corner store for the 3rd time and it’s life in prison. Declare bankruptcy 6 times, don’t pay taxes, and millions in loans are forgiven.

        Good book calls, night all.

  20. Michael Engel says:

    Ambrose Bierce,
    Mark Levin agrees with you.

  21. Jdog says:

    2021 time bombs.

    1. Commercial real estate
    2. Residential real estate now in forbearance
    3. Business, lower profits, burning cash, bankruptcies
    4. Lower Municipal tax revenues, possible bankruptcies
    5. Lower State tax revenues, possible bankruptcies
    6. Increasing layoffs / increasing unemployment
    7. Second wave of Covid being worse than initial wave
    8. Political bifurcation continuing and becoming more extreme

    These issues are all in play, and most currently have momentum, to become ever increasing problems. I cannot see any solutions for these trends in the coming year.

  22. wkevinw says:

    GDP is like so many of these economic stats- difficult to measure the way everybody wants. There are many flaws in it.

    I have searched many times for something better, such as Net Domestic Product (is just some kind of accounting for depreciation of capital goods in the country), or Net Domestic Income, or Gross Value Added.

    None of them are anywhere near perfect stats for what we want to measure.

    It’s not easy.

  23. wkevinw says:

    Interesting GDP behavior:

    Regardless of news events, political issues, etc., between ~1945 and 2020 the 10 year moving average of US GDP growth has relentlessly moved lower from about 4.5% in 1945 to 2.1% now. If you do a linear regression, the 10 year moving averages wiggles around over time but moves over and under that line for >70 years (regardless of the news, politics).

    At this rate, we’ll be at about 0 GDP growth in about 50 years or so.

    Note that many economists think that for a mature economy, ~2% growth over ~ a year is the healthy target. Even too much above that is viewed as unhealthy, e.g. caused by speculation or misguided government policies. For what that’s worth.

  24. Lee says:

    Those that want to score political points will point to the plunge in Q2 of “31.4%” and only a “7.4%” rebound in the next quarter………………..

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