GDP Grew at 4.9%, Are We At Peak GDP?

The BEA reports that GDP grew at 4.9% and it begs the question if we are at peak GDP for the next few years, more on that later.

Real gross domestic product (GDP) increased at an annual rate of 4.9 percent in the third quarter of 2023 (table 1), according to the “advance” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 2.1 percent.
The GDP estimate released today is based on source data that are incomplete or subject to further revision by the source agency (refer to “Source Data for the Advance Estimate” on page 2). The “second” estimate for the third quarter, based on more complete data, will be released on November 29, 2023.

Source: BEA.gov

What are the key headwinds moving into next year?

1. The full effect of the Fed’s increases in central bank rates driving up the cost of borrowing
2. The full effect of resumption of student loan repayments
3. Mortgage rates at 8 percent making housing a very expensive proposition for new buyers.
4. Peak unemployment at 3.8 percent, is there anywhere to go but down?

Alternatively there are some things that may continue to boost GDP.

1. Inflation – A tight labor market will continue to drive wages up giving consumers more money to spend
2. Unions – Union strikes have been mostly successful in giving pilots, truckers, and auto workers very large raises this year and into the future. These higher wages for union workers will drive higher wages in other areas and industries as they have to compete for labor.
3. Government Spending – The Inflation Reduction Act had a trillion dollars in spend that has yet to be executed and most won’t start until next year and beyond.
4. Artificial Intelligence – We have been playing with Bing’s new image creator and we are blown away by it’s capabilities. We suggest you give it a try at http://www.bing.com/create. This has the potential of eliminating jobs in art and photography and may evolve into video.

The best thing we can do is prepare for both scenarios and position for profits so stay tuned, stay profitable and stay solvent…