Considering that 3rd quarter earnings season hasn't been much to write home about -- unless what you're writing is "Get me out of this place, Mom!" -- this morning's first look at 3rd quarter GDP was a relatively pleasant surprise. The annualized growth rate for Q3 came in at 2.0%, a couple ticks above the 1.8% expected. No great shakes, but hey -- we'll take it.
Consumption was up from last quarter's 1.5% to 2.0%, which is a tad light from the 2.1-2.2% expected, but pretty much inline. GDP Price Index was the number that jumps out: 2.8%, compared to the last look of 2.0%, and at least a half a percentage point above expectations. Consumer Price Expenditures were up 2.3% -- again, a smidge light but inline overall. Housing, continuing the narrative of its long-awaited comeback, is up an annualized rate of 14.4%.
So there's nothing to get wild about here, either from a positive or a negative perspective. But the sentiment ahead of this morning's announcement seemed to be about steeling resolve in case the overall GDP number was a big disappointment. After all, we've seen little but earnings misses from the market's most stalwart titans in Q3, especially in tech, from Apple (AAPL) yesterday afternoon to Google (GOOG) and Microsoft (MSFT) a week ago. So mildly good news can also be seen as a small sigh of relief.
What does this first read of GDP -- which, of course, is subject to significant revisions in the next 2 reads as more information comes available -- mean for the markets near-term? Basically, the Consumer is holding its own relative to Business spending, though everyone still seems more conscious than overly hopeful. Business spending has been flat-to-down, but with Housing continually gaining momentum, perhaps we're seeing a bit more Consumer confidence, which may carry forward into the next few quarters.
Then again, overhangs of uncertainty such as the presidential election and the potential fiscal cliff conundrum are ample reasons for doubt. To wit, although future have gained a bit ahead of the GDP announcement, they are still down prior to Friday's market open.
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