The outlook for fourth-quarter GDP growth is looking shaky at the moment, but the antidote for macro worries is still firmly entrenched in the labor market. Payrolls have perked up in recent months and today’s release of new unemployment filings hints at more of the same as fresh numbers roll off the government’s assembly line in the weeks ahead.
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Yesterday’s upbeat data for US personal income and spending delivered some holiday cheer, but the gains didn’t help the Atlanta Fed’s fourth-quarter GDP estimate. The fed bank’s widely followed GDPNow forecast for Q4 growth tumbled to a weak 1.3% (seasonally adjusted annual rate) in yesterday’s revision (Dec.23), down from the previous 1.9% projection. The update is a reminder that US economic growth appears on track to end 2015 with a whimper.
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● US personal income rises in Nov, boosting consumer spending | Reuters
● US durable goods orders unchanged in Nov | MarketWatch
● New home sales in US rose 4.3% in Nov | WSJ
● US consumer sentiment ticks up in Dec | 24/7 Wall St
● Mortgage applications in US jump 7.3% in week through Dec 18 | HousingWire

There’s no shortage of macro risks facing the US economy, but personal income and spending aren’t among them, at least not in today’s update. Both measures increased at healthy if unspectacular rates in November vs. the previous month, the Bureau of Economic Analysis reports.
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Asset allocation is widely celebrated as the most-important investment decision, but the details matter… a lot. Indeed, sometimes asset allocation can be your worst enemy, depending on how the strategy is executed.
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● US consumer spending in Nov rises by most in 3 mos | Bloomberg
● US Q3 GDP revised down slight to 2.0% | CBS Money Watch
● US economy set to grow less than 3% for the 10th straight year | Mkt Watch
● US existing home sales plunge; new rules seen as drag | Reuters
● Richmond Fed: Manufacturing expands in Atlantic region | Bond Buyer
● Summers: Fed’s mistakes are a cause for pessimism | WaPo
● OPEC: Developing Nations Will Drive Energy Demand Next 25 Yrs | MNI

Financial stress in the US has been low in recent weeks, according to four benchmarks published by Federal Reserve banks. The relative calm comes in the wake of the first increase in the Fed funds rate in nearly a decade, a widening of the high-yield spread and increased anxiety about the outlook for economic growth. Despite those changes, several metrics that are designed to quantify the overall level of financial stress point to a generally serene state of affairs for the nation’s financial system.
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● Chicago Fed: US economic growth slowed in Nov | Chicago Fed
● Eurozone consumer confidence ticks higher in Dec | EC
● German consumer confidence projected to improve in Jan | DW
● China loses another eco indicator: Minxin Suspends PMI | Bloomberg
● Manufacturing employment in China: In a class of its own | Petersen Inst
● China outlines economic plan for 2016 | WSJ

US economic growth in November remained below the historical trend rate for the second month in a row, according to this morning’s update of the Chicago Fed National Activity Index. Revised data for the benchmark’s three-month moving average (CFNAI-MA3) slipped to a negative 0.20 reading last month–down slightly from -0.18 in the previous month and the lowest since March.
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US economic growth is on track to decelerate in the fourth quarter, according to The Capital Spectator’s average estimate via several econometric forecasts. Q4 GDP is projected to rise at a sluggish 1.5% rate (seasonally adjusted annual rate), down from the 2.1% advance in Q3.
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