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This Week in Economic News: October 26 – October 31, 2020

October 30, 2020


Historic Growth Points to “V” Shaped Recovery

  • GDP in Q3 increased by an annualized 33.1 percent, or nearly $1.3 trillion.
  • The economy recovered over 75 percent of the drop in Q2 and nearly 66 percent of the entirety of the recession.
  • Consumer and investment spending were major drivers of the historic growth.
  • Consumer spending was driven by healthcare spending, car sales, food services and accommodations, and clothes.
  • Investment spending was driven by businesses purchasing transportation equipment and consumers purchasing houses.
  • Unlike the current recovery, other American recessions featured a “U” shape.

(About GDP: The growth rate of GDP measures how much the economy, and therefore a nation’s wealth, is growing.)

Consumer Spending

American Families Showing Increased Confidence with Greater Consumer Spending

  • Consumer spending rose 1.4% last month, after gaining 1% in August.
  • Economists polled by Reuters had forecast consumer spending rising only 1% in September.

(About Consumer Spending: Consumer spending accounts for more than two-thirds of U.S. economic activity. An increase signals increased consumer confidence and portends better performance by main street businesses making sales.)

New Home Sales

Nearly 1 Million (Seasonally Adjusted) New Homes Sold in September

  • Despite the usual decrease in sales during the fall, new home sales grew over 32% over the past year.
  • Median prices for new homes grew to $326,000.

(About New Home Sales: New home sales measure the amount of sales of newly constructed single-family homes, condos, and co-ops.)

Durable Goods

5th Consecutive Monthly Increase for Durable Goods Orders

  • New orders for durable goods increased by nearly 2.0%.
  • Capital expenditures increased by 1% after completely making a complete recovery from the recession in August.

(About Durable Goods Orders:  Durable goods orders give a sense of the goods production that will take place in the coming months. An increase in goods orders suggests that manufacturing activity must ramp up in order to meet the needs of an increase in consumer demand. Additional workers, hours worked, or overtime may be needed in order to fill those orders.)

Coming Up:

ISM Manufacturing

When: Monday, November 2, 2020

(About ISM Manufacturing: The Institute for Supply Management monthly surveys purchasing and supply executives on the current state of their industries and their contributions to GDP. The results of the survey provide a snapshot of the health of U.S. manufacturing.)

FOMC Meeting

When: Thursday, November 5, 2020

(About the FOMC: The FOMC sets appropriate monetary policy by influencing interest rates to achieve their Congressional dual mandate of stable prices and maximum employment.)

Employment Situation

When: Friday, November 6, 2020

(About the Employment Situation: The Employment Situation tracks how many jobs were created/lost, the unemployment rate, and wages. This report gives the clearest monthly snapshot of how healthy the economy is doing.)

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