Week in Review: October 30, 2020

A very busy week for economic data was headlines by 3Q GDP which increased 33.1% following a 31.4% decline in the second quarter. Strength was broad based, with consumer and business spending rebounding 41% and 83%, respectively, after falling 33% and 47% in the second quarter. The rebound reflected states’ efforts to reopen their economies and the benefits of fiscal stimulus. Despite the improvement, growth remains considerably below where it began the year. To fully recover back to breakeven, 4Q GDP would need to increase 15%. The current consensus forecast is for 4% growth.

Housing took a breather in September, as both new home sales and pending home sales fell from August levels. Given the recent strength of the sector the slight pullback was not surprising. Compared to a year ago, new and pending home sales were up 32% and 20.5%, respectively.

Readings on the consumer’s view of the economy were mixed with consumer confidence slipping slightly in October, while consumer sentiment increased slightly. The general lack of direction suggests that consumers are taking a wait-and-see approach to the election and perhaps balancing a recent surge in coronavirus cases against generally positive economic data.

Initial jobless claims fell 40k, to 751k, the lowest reading since March, and better than the expected 775k. Continuing claims fell just over 700k to 7.76M, slightly higher than the expected 7.7M.