The U.S. economy is projected to slow down in the fourth quarter of this year, according to median forecasts from The Capital Spectator based on several econometric analyses. The initial Gross Domestic Product (GDP) estimate for the last three months of 2014 indicates an anticipated growth rate of 2.1% (real seasonally adjusted), significantly lower than the previous quarter’s 3.5% rate. This information is detailed in the Q3 report released by the Bureau of Economic Analysis (BEA) last month.
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● Protests escalate after the Ferguson grand jury decision | USA Today
● Surge in private consumption helps Germany steer clear of recession in Q3 | Reuters
● Global business confidence hits a five-year low | Markit
● Growth in U.S. services sector declines to a seven-month low | Markit
● Retail sales in Italy record fifth consecutive monthly drop in September | Reuters
● Dallas Fed reports slower growth in Texas manufacturing activity in November | Dallas News
● Global growth expected to receive a $200 billion boost from falling oil prices | Telegraph
The pace of growth in the U.S. slowed more than anticipated in October, as reported by the latest update from the Chicago Fed National Activity Index. The three-month moving average of this benchmark, which comprises 85 indicators, dropped to a negative 0.01 in October from +0.12 in September. The decline was driven mainly by weaknesses in production-related indicators. According to the press release, this suggests that national economic activity was near historical trends.
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A troubling misconception persists regarding the accuracy of economic and market forecasts. On one hand, there’s a belief that these predictions are entirely reliable; on the other, some assert that forecasts are futile under any circumstances. Both viewpoints are unhelpful and potentially hazardous. While forecasting is inherently uncertain and fraught with pitfalls, completely avoiding this aspect of the financial world is not feasible. Therefore, a critical, clear-headed approach to forecasting is essential. Sadly, rational discourse on this contentious issue often seems rare amid the sea of speculative predictions.
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● German business confidence experiences unexpected rise in November | Bloomberg
● Euro value nears a two-year low as investors anticipate more easing from the ECB | Reuters
● Attention focuses on oil: What will OPEC’s next steps be? | CNNMoney
● China reduces interest rates for the first time since 2012 | RTT
● Upcoming U.S. data includes Q3 GDP, MNI Chicago, durable goods, and housing statistics | MNI
● Putin maintains a hawkish stance with the Russian central bank—for now | Reuters
● Putin’s Kleptocracy: Who Owns Russia?
By Karen Dawisha
Review via The Wall Street Journal
The systematic embezzlement, fraud, and abuse of power among Vladimir Putin’s inner circle have long been suspected but rarely documented in detail. Karen Dawisha’s compelling book gained attention in April, months before its release, when Cambridge University Press withdrew from publishing it in the UK due to concerns over defamation laws. “Putin’s Kleptocracy: Who Owns Russia?” provides meticulously researched insights that are timely given the context of the controversy surrounding its publication.
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The three-month average of the Chicago Fed National Activity Index (CFNAI) is predicted to decrease to a +0.11 reading in the forthcoming October update, set to be released on Monday, November 24. This forecast is based on The Capital Spectator’s median econometric estimates. This projection is notably lower than the +0.25 reading for September, which indicated above-average economic growth relative to historical trends. According to guidelines from the Chicago Fed, only readings below -0.70 enhance the risk of a potential recession. The expected three-month average for October remains in a range consistent with growth above historical trends.
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Currently, the field of major asset classes does not exhibit significant competition for the top position. U.S. Real Estate Investment Trusts (REITs) continue to lead over the past year (a span of 250 trading days), demonstrating a substantial margin ahead, as evidenced by our selection of ETF proxies for various global market segments. This means that U.S. stocks have recently slipped to a secondary position, and their performance has trailed significantly. Although the Vanguard Total Stock Market ETF (VTI), which reflects a broad array of U.S. equities, boasts a solid gain over the last year (+15.0%), it falls short of the impressive 24% surge noted for the Vanguard REIT ETF (VNQ).
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Paul Krugman appears to be having a moment of reflection on supply-side economics. The renowned economist and New York Times columnist argued recently that increasing taxes could jeopardize Japan’s delicate economic recovery. “Shinzo Abe is doing the right thing by postponing the next rise in consumption taxes,” he wrote on his blog yesterday. “This is a prudent economic policy….”
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● Leading Economic Index in the U.S. saw an increase again in October | Conference Board
● Consumer prices in the U.S. remained flat in October, while core CPI rose by 0.2% | USA Today
● Consumer confidence in the Eurozone unexpectedly declines in November | RTT
● UKIP, a populist anti-EU party, captures a second seat in Britain’s Parliament | NY Times
● Obama announces ‘lawful action’ to shield 5 million immigrants | USA Today
● Japan’s Prime Minister seeks a referendum on ‘Abenomics’ through a snap election | Reuters
In summary, this article offers a rounded view of the current economic landscape, highlighting various indicators and forecasts influential on both U.S. and global markets. With predictions showcasing a deceleration in growth and mixed signals from various sectors, understanding these dynamics is imperative for stakeholders and policymakers alike.