Do you feel the recovery? The markets did on Thursday as word that the economy grew by 3.5% in the third quarter led to a 200-point rally in the Dow Jones Industrial Average Index.
However those gains were lost and then some on Friday as the Dow dropped 225 points. And it could have been more than simple buy the rumor sell the fact activity.
John Williams of shadowsstats.com, in his commentary on Thursday wrote, “The general outlook for the U.S. economy continues to be for severe contraction, with the worst still ahead.”
Williams points out that 92% of the third quarter growth can be attributed to one time stimulus programs. Yes that is the whole point of the stimulus but at some point the training wheels must come off and when they do some real economic growth needs to happen.
Williams point out that “All U.S. recessions in the last four decades have had at least one positive quarter-to-quarter GDP reading, followed by renewed downturn.”
He expects that to continue this time.
Tags: Dow Jones Industrial Average, GDP
