The U.S. Economy Is Still In Big Trouble

Hope springs eternal. Today’s stronger-than-expected GDP numbers are bound to be trumpeted by optimists that the U.S. economy can achieve a soft economic landing.

Before being carried away by that optimism, one might want to place today’s GDP numbers in the context of the two-quarters of negative economic growth that preceded it. More importantly, one might want to take note that these numbers are likely to encourage the Federal Reserve to continue with its excessively hawkish monetary policy stance. That continued hawkishness all too likely will lead to a hard economic landing.

To be sure, we must welcome today’s better-than-expected GDP number. However, if we take into account that the third quarter’s 2.6 percent GDP number was preceded by two consecutive quarters of negative economic growth, we have to conclude that the US economy has basically been flat this year. That is hardly anything to write home about particularly when all the inflation indicators are pointing to inflation still running at multi-decade highs. Nor is it anything to write home about when the underlying strength of demand seems to be fading.