Weekly Market Update: December 5, 2016
What We Learned Last Week
Real Gross Domestic Output grew 4.2 percent annualized in 3Q. That’s the average of 3.2 real Gross Domestic Product (GDP) growth and 5.2 percent real Gross Domestic Income (GDI). Last week’s revised GDP estimate included the first estimate of GDI. The Bureau of Economic Analysis (and research by analysts at the Council of Economic Advisers) believes real Gross Domestic Output (GDO) is a better measure of economic activity than either GDP or GDI alone.
Car sales this year may match last year’s 17.4 million record level of a full year.
The job market continues to hum with employment still growing at an above-trend pace. Because the official unemployment rate is back to normal, further above-trend employment growth will be supported by the return of up to two million remaining young adults who gave up looking for a job during the recession and who aren’t reflected in the official unemployment measure. The low and steady pace of jobless claims has been heralding for a long time the robust recovery in the jobs market (and economy more generally) that’s now plain to see.
- Organization of Petroleum Exporting Countries (OPEC) members agreed to reduce output by 1.2 million barrels daily and non-OPEC members, including Russia, promised to trim output by 0.6 million barrels daily. American shale fields respond to prices not cartel agreements. US production has fallen by one million barrels daily since the 2014 peak; rigs in operation are picking up again with oil prices firming.
- Jobless claims are volatile around holidays but are staying at a very low weekly pace of about 250,000.
What We Expect to See in the Week Ahead
- The calendar features the second string, including productivity, international trade and nonmanufacturing indicators.
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