WASHINGTON D.C. – U.S. economy remains on a treadmill in the third quarter, rising 2 percent from the 1.3 percent in the second quarter. Inventories did decline, which means businesses are selling and have less goods sitting unsold in warehouses.
Friday?s third quarter data still has to be revised, but has beat market estimates. At this point a two percent print is enough to keep more people positive than negative, but not enough for businesses to start hiring again.
The Bureau of Economic Analysis said that the third-quarter advance estimate is based on source data that are incomplete or subject to further revision by the BEA. The ?second? estimate for the third quarter, based on more complete data, will be released on November 29.
In the pre-market hours, the SPDR S&P 500 (SPY) exchange traded fund was trading marginally lower. S&P futures were down around 0.6 percent and Dow futures were down around 0.9 percent, while Nasdaq was trading higher with 45 minutes to go before the opening bell.
The market is clearly holding out for the election turnout, and making investors take a ?wait and see? approach. The higher growth rate is a boost for President Barack Obama, who will say that the economy is improving. Meanwhile, his challenger Mitt Romney, will use Friday?s data to show that despite the momentum, the economy remains weak.
At this week?s Buttonwood conference, held in New York and run by The Economist, the overall takeaway was reasonably optimistic that the U.S. would turn out okay with raising the debt ceiling again, coming in March. The biggest issue in the fiscal cliff is the Bush tax cuts and whether they will be expired or not. Keeping the Bush tax cuts for the wealthy is seen as a positive for the financial services industry, as rich people will have more money to invest in the markets.
