The third quarter's U.S real gross domestic product growth rate of 3.5 percent is forecasted to be revised down to an annualized rate of 2.9 percent, due to the widening of the county's trade deficit, as the 3.5% growth detected within the third quarter seemed artificial and should actually be strongly questioned and explained; since the jobless rate jumped beyond expectations reaching above 10 percent for the first time since 1983.
In fact, today's revised annualized third quarter growth should be also questioned as it is mainly triggered by the huge amounts of money injected in the economy by the U.S economy and do not reflect a strong recovery since the labor market is continuously deteriorated and the income and spending throughout the country remain weak, not forgetting that the U.S trade deficit widened to $36.5 billion in September from $30.8 billion the previous month.
Furthermore, we should not forget that the GDP is merely a reflection of a certain economy's performance in a specified period of time; therefore any improvement reflects the well being of the economy in all of its considered aspects; suggesting higher income and confidence in the economy, which should lead to an incline of production levels.
However, Consumer Confidence will be released later on for this month and is forecasted to show a slight decline to come in around 47.5 from a prior reading of 47.7; indicating that the U.S consumers' sentiment regarding business conditions, employment and personal income remains weak and gloomy, despite the first growth witnessed throughout the third quarter.
In addition, the major component of the GDP; personal consumption, is highly expected to show a slight decline and is to be revised to the downside to come in around 3.2% from a prior reading of 3.4%, clearly indicating that overall personal expenditures of households, such as food, rent, and medical expenses, continue on being fragile due to the rising jobless rate and the ongoing downside pressures of the recession; while the third quarter revised Core PCE may stay unchanged at 1.4%.
Plus, we should definitely not forget that FOMC Meeting Minutes, which will be released later on today, and include efficient in-depth insights of the economic conditions that influenced traders' vote on where to set interest rates, knowing of course that so far the Fed declared that it will keep the rates close to zero for a long prolonged period, due to the current weak economical conjuncture of the country.
Besides, it is strongly speculated that the world's reserve currency will continue weakening even if interest rates are raised, knowing that Standard Chartered Plc, Aletti Gestielle SGR, HSBC Holdings Plc and Scotia Capital Inc. declared that the dollar may depreciate as much as 6.4 percent versus the Union currency, which supported the gold to reach a record high yesterday and permitted overall commodities to climb to the upside.
