Earlier this year, there was widespread concern about the slowdown in US economic growth. Real GDP rose 2.0% (q/q saar) during Q1 and only 1.3% during Q2. The preliminary official estimate for Q3 edged back up to a still anemic 2.0%. That triggered some chatter that the economy was too close to “stall speed.” There were similar concerns expressed during 2010 and 2011.
In the past, whenever the y/y growth rate of real GDP fell below 2.0%, a recession followed. That strongly suggests that rolling a pair of snake eyes is bad luck for the economy. Last year’s low was 1.6% y/y during Q3. So far this year, the lowest reading was 2.1% y/y during Q2.
Yet the economy is still chugging along. On Thursday, Q3’s real GDP is likely to be revised up significantly to 2.8% (q/q saar), according to the latest consensus of economists compiled by Bloomberg. That would put the y/y growth rate at 2.5%.
Today's Morning Briefing: Snake Eyes. (1) Stall speed? (2) Real GDP still chugging along around 2%. (3) Upward revision. (4) Will storm surge offset fiscal cliff? (5) Paying dividends. (6) Consumers continue to do what they do best. (7) Optimism is in season. (8) Intermodal railcar loadings at record high. So are inventories. (9) Capital spending is a drag. (More for subscribers.)