30 Oct October 30, 2020
Week in Review
GDP
Advance 3Q GDP rose at an annualized rate of 33.1%.
Our Take: While GDP has not yet returned to pre-pandemic levels, outstanding growth in the third quarter points toward a V-shaped recovery. Consumption and private investment numbers were excellent. Net exports represented the biggest drag on economic performance, but this was likely due to the fact that imports rose in response to solid domestic consumption while exports did not keep pace, as the rest of the world economy was not improving as fast as the U.S. There is still a long way to go until the recovery can be deemed complete and how effectively the virus can be contained will likely determine its path and pace.
Personal Income and Spending
Consumer spending increased 1.4% in September. Personal income rose 0.9%.
Our Take: Both income and spending outperformed expectations and represent a continued economic recovery. Incomes are still being aided by government transfers, which will decline in Q4. As with seemingly everything these days, the trajectory of COVID-19 and the governmental response will have a major effect on future income and spending.
Europe
The ECB left policy unchanged at their scheduled meeting but strongly signaled that they would increase the size of their bond-buying program at the December meeting. This was in response to weakening economic indicators in the Eurozone as nations there-implement restrictions in response to a resurgence in COVID-19 infections.
Our Take: The resurgence of the virus in the Eurozone is a headwind to a continued recovery. It remains to be seen whether or not further extraordinary monetary stimulus will succeed in offsetting the impact of virus-related restrictions.
Municipals
Voters will decide on $52 billion of bond measures when they cast ballots on November 3. This marks the smallest amount in a presidential election year since 2012 and $20 billion less than voters decided on in 2016 according to Bloomberg.
Our Take: It is not surprising that fewer bond measures will be in front of voters this year. Due to the pandemic, uncertainty surrounding state and local budgets has some municipalities waiting on bond measures.
All expressions of opinions are subject to change without notice in reaction to shifting market conditions. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities and should not be relied on as financial advice.