Financial FAQs
“The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2026 is 5.1 percent on September 17, unchanged from September 16 after rounding. After this morning’s housing starts release from the US Census Bureau, the nowcast of third-quarter real residential investment growth decreased from -4.3 percent to -4.7 percent.”
This five-year plus cycle of business growth that began after the COVID-19 recession could continue for years. I have become much more upbeat about our economic future.
All signs are pointing to perhaps a large jump in economic growth for several years, despite the geopolitical chaos. Why? Trump and Republican actions may not be as damaging to the world economies from his tariffs and desire to have a second Gilded Age that has created so many robber barons and the massive concentration of wealth.
The massive A.I. investments and stock market highs say that it could continue despite the reordering of world markets amid so much geopolitical uncertainty. This could outweigh the effects from tariffs and the unending Iran war that continue to elevate inflation. Growth isn’t being boosted by just the A.I. build out that is projected to cost some $800B, more than all residential real estate investment.
The manufacturing and service sector activity as measured by the latest Institute of Supply Management indexes are still expanding, causing long-term interest rates to rise as well.
“In August, the Services PMI® registered 55.4 percent, an increase of 1.3 percentage points compared to July’s figure of 54.1 percent. The Business Activity Index remained in expansion territory in August, increasing 2.6 percentage points to 61.7 percent from July’s reading of 59.1 percent.”
“The Manufacturing PMI® registered 54.6 percent in August, 1 percentage point below the July figure of 55.6 percent. The overall economy continued in expansion for the 22nd month in a row. (A Manufacturing PMI® above 47.5 percent, over a period of time, generally indicates an expansion of the overall economy.)”
The Atlanta Fed’s GDPNow estimate of third quarter GDP growth is 5.1 percent for the second consecutive month, above most economists’ predictions. Consumers and governments are on a spending spree, as well as the construction of A.I. data centers that are blanketing the country.
The longest positive growth cycle to date was during the Obama and Trump I administrations—2009 to 2020, slightly eclipsing the 1990’s Clinton era that ended with four years of budget surpluses.
S&P also chimed in with its composite output index growing the fastest in five years. But will it withstand the Federal Reserve rate hike cycle just begun, with maybe a second rate boost this year?
The key to prolonging this business cycle is also the labor market, which has been subpar until now. The August 162,000 total nonfarm payroll employment was a total surprise, given the average monthly gain of just 31,000 over the prior 12 months.
Surprisingly, American shoppers are out in force for the first time this fall after several pauses as they rushed to get ahead of rising prices for the holidays, I said last week.
So corporations must keep hiring, in spite of the looming fear of A.I. robots supplanting many jobs.
Harlan Green © 2026
Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen
.jpg)
No comments:
Post a Comment