27 November 2024
If you are covering the latest US GDP figures, please see the following comment from Lindsay James, investment strategist at Quilter Investors:
“The US economy is clearly motoring. The second reading of Q3 annualised US real GDP growth has come in at 2.8%, in line with expectations and following 3% growth delivered in Q2, and 1.6% seen in Q1.
“Rising real wages, falling interest rates and likely falling taxes and deregulation are all factors that are usually good news for stocks, and markets are already performing strongly in factoring in the better than expected growth.
“US GDP has defied expectations throughout 2024, having been helped along by numerous factors. Consumer confidence levels, which have been consistently dreadful and would have indicated otherwise, do not seem to have deterred spending. Instead, US consumers continued with purchases, if more selectively in lower income households, which has played a significant role in boosting the economy.
“While growth has proven unexpectedly strong this year, looking ahead, Trump’s Cabinet picks combined with a set of economic policies that are substantially un-tested in modern developed world economies mean that the range of outcomes for 2025 is wide. Nonetheless, expectations for the US economy are now much higher than they were, reflected by stock market gains of around 30% year to date.
“With an impending sugar high from Donald Trump on the horizon, the US economy should continue to grow at a similar rate. However, it will take some time for the true nature and impact of the president-elect’s policies to materialise, with inflationary risk a particular flash-point, so both investors and the Federal Reserve will no doubt tread very carefully going forward.”
