Consumer Confidence Surges, GDP Revised Upward, Comments from Dr. Joe Webb
Wednesday, November 26, 2003
November 26, 2003 -- (WhatTheyThink.com) -- Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 8.2 percent in the third quarter of 2003, according to preliminary estimates released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 3.3 percent. The GDP estimates released today are based on more complete source data than were available for the advance estimates issued last month. In the advance estimates, the increase in real GDP was 7.2 percent. Dr. Joe Webb, industry analyst and WhatTheyThink.com contributor, discussed other aspects of the report. “The same release reported that corporate profits were up by 11.6% from the previous quarter to $739.6 billion. While the rate of increase slowed, in raw dollars, this was a $77 billion rise and was a 33% increase compared to the same period last year. More importantly, corporate cash flow increased by more than 7%, and that rate was higher than last period, indicating the effect of accelerated depreciation.” Dr. Joe stated that for those who want a little gloom to calm their euphoria, chances that the Fed will raise rates earlier rather than later have increased, and a rise in protectionist sentiment should dampen some expectations for the next months. “Oh, and all those accelerated depreciation schemes? They front-load depreciation expenses, and therefore, their effect on cash flow disappears rather quickly. They'll be great for the rest of 2003 and all of 2004, but we'll need the unstimulated economic engine humming to give us a really solid economy in 2005.” Consumer Confidence: The Conference Board's Consumer Confidence Index registered another solid gain in November. The Index now stands at 91.7 (1985=100), up from 81.7 in October. The Present Situation Index surged to 80.1 from 67.0. The Expectations Index rose to 99.4 from 91.5. Consumer confidence is now at its highest level since the Fall of 2002 Dr. Joe Webb said that the Board’s more focused indices showed gains as well. “Almost 20% expect gains in their incomes and pessimism about finding new jobs fell as well. This confirms that the holiday retail season should be rather strong. Now the only thing missing is for the surveys of CEOs to reflect an upturn. Will they be the last to know that we've turned the economic corner?” GDP Info: Download the release http://www.bea.gov/bea/newsrel/gdpnewsrelease.htm Download the data http://www.bea.gov/bea/newsrel/gdp303p.xls Consumer Confidence Data: Read the release http://www.conference-board.org/economics/consumerconfidence.cfm ==== Premium Access Members at WhatTheyThink.com can view more analysis in Dr. Joe Webb’s weekly column on Friday, appropriately called “Fridays with Dr. Joe”.