US equities have proven to be a remarkable investment this year, showcasing a 30% increase to date, as indicated by our ETF proxy, the Vanguard Total Stock Market (VTI). There is ongoing debate about whether this asset class is precariously perched or genuinely reflecting solid economic fundamentals. Regardless, witnessing such growth is impressive. While a 30% rise in US equities isn’t unheard of, it is neither a common occurrence nor typically sustainable. One thing is certain: if your investment strategy lacked exposure to US stocks this year, your performance likely pales in comparison to passive strategy benchmarks that are favorably weighted toward this year’s leading assets.
The projected growth for the US GDP in the fourth quarter is estimated at 2.0% (real seasonally adjusted annual rate), according to The Capital Spectator’s revised average econometric forecast. This new estimate slightly exceeds the previously reported figure of 1.9%, which was published on November 18. The government’s initial estimate for the fourth quarter GDP will be released on January 30.
In the upcoming days (or possibly weeks), I will be transitioning The Capital Spectator from the MovableType platform to WordPress. During this process, the site may experience intermittent downtime as I tackle technical challenges and address the inevitable issues that arise.
● Going Viral
By Karine Nahon and Jeff Hemsley
Summary via publisher, Polity
In today’s world, a tweet can be instantly reshared, reaching millions in moments; a video can bring down a political figure’s career overnight; and an unknown individual can rise to global fame in the blink of an eye. Virality is a double-edged sword: it is crafted by individuals, feared by governments, and coveted by companies. What makes certain content go viral while others languish in obscurity? In “Going Viral,” Nahon and Hemsley delve into the mechanics of virality, analyzing network characteristics and the pivotal role of gatekeepers who influence the information flow between different networks. They also highlight how human attention shapes viral phenomena, discussing concepts such as word of mouth, the bandwagon effect, homophily, and interest networks that elucidate the individual behaviors that contribute to viral events.
The labor market demonstrated further growth last month, with private payrolls increasing by 196,000 in November—slightly exceeding expectations, based on The Capital Spectator’s average econometric projection. However, this gain fell short of the revised increase of 214,000 in October. Nevertheless, the growth trend in November indicates that the economy is creating jobs at a slightly faster pace compared to the recent past. Meanwhile, the latest update on personal income and spending presents mixed results. Personal consumption expenditures rose by 0.3% in October, which aligns with expectations. In contrast, disposable personal income declined by 0.2%, marking the first monthly drop since January.
This morning’s economic reports present a generally optimistic view of the US economy, although it may not be entirely accurate. The Bureau of Economic Analysis has revised the second-quarter GDP significantly higher, estimating that the nation’s goods and services output grew by 3.6% during the three months ending in September (seasonally adjusted annualized real rate). This figure is notably above the initial estimate of 2.8% gain for the third quarter.
The Bureau of Economic Analysis is projecting a 0.3% increase in US personal consumption spending for October, compared to the previous month. This estimate comes from The Capital Spectator’s average econometric forecast, slightly surpassing the previously reported 0.2% growth for September. Today’s analysis aligns with the 0.3% forecast projected in three economists’ surveys.
Based on The Capital Spectator’s average econometric point forecast, private nonfarm payrolls in the US are expected to rise by 180,000 (seasonally adjusted) in the upcoming November report from the Labor Department. This anticipated increase is significantly lower than the previously recorded rise of 212,000 for October. Further, this November projection falls within a range of widely differing consensus forecasts from economists.
According to this morning’s ADP Employment Report, the US economy added a net total of 215,000 jobs in the private sector last month, marking the highest monthly gain in a year. This promising development suggests that the surprisingly positive October payroll report from the Labor Department was not an anomaly.
The Economist raises an enduring question: Who excels at forecasting? This inquiry is both straightforward and essential, yet we still lack concrete answers in numerous instances. Personally, I adopt the perspective that no one and everyone possesses forecasting abilities. On one hand, no one can predict the future with complete certainty; yet on the other hand, even flawed forecasting methods can yield correct outcomes occasionally, driven by sheer luck. It is within the ambiguous territory between these two extremes that we often find ourselves attracted, sometimes discovering useful insights.
