US economic revisions – GDP up 3% in Q2.
Gross domestic product increased at an unrevised 3.0% annualized rate last quarter, the Commerce Department’s Bureau of Economic Analysis confirmed in its third estimate of second-quarter GDP.
Gross Domestic Income, which measures economic activity from the income side, increased at a 3.4% rate last quarter, revised up from the initially estimated 1.3% pace. It rose at an upwardly revised 3.0% pace in the January-March quarter. GDI was previously reported to have increased at a 1.3% rate in the first quarter.
This is affirmation that the US economy has stayed resilient despite high interest rates, defying the predictions of some bears that claim that the US was in fact already in a recession.
The Atlanta FED GDPNow is forecasting Q3 GDP at 3.1%
China big stimulus
Xi Jinping chaired a politburo meeting and discussed economic matters. It was unusual as economic matters were traditionally discussed in April, July and December. That shows some sense of urgency as the 5% growth target seems out of reach. Importantly, boosting fiscal spending took a front seat in the read out. Still, we are awaiting details which will come out in the next few weeks. Nevertheless, investors are loving it, sending the CSI 300 up 15.7% for the week, the best performance since November 2008.
The provision of some social security benefits to those who haven’t found a job after graduation is a policy U-turn. This should help arrest the decline in sentiment among the unemployed youths. The call for more quality jobs remains doubtful if businesses are not optimistic about the future and regulations continue to favour state enterprises.
As for the property sector, the important policy improvement is central bank re-lending program, providing 100% of the principal. up from 60% previously. Lower mortgage rates and downpayment were also introduced. Can this help developers complete the unfinished properties, improve buyer confidence and arrest the price decline? Let’s wait for the evidence.