|

Currency market – GDP: Levels and forecast

GDP at -1.6 from the last quarter achieved a level just below the current absolute bottom at -1.7. GDP refers to Real and the RBNZ contains all data for interested. GDP also refers to annualized as the data was separated in years to run from the 1 to 10 year average. The data dates to 1990.

The Atlanta Fed GDP Nowcast reports GBP today at -1.2. My factor is -1.0 and -0.47.  GDP is located in a range from -1.0 to 0.06. The Atlanta Fed Nowcast is a hodge podge of convolution as much easier and faster methods exist to arrive at a better forecast.

From -1.7 and any number in negative territory or at low positive, GDP is massively oversold from the 1 year to 10 year averages. Oversold informs GDP in subsequent quarters should be positive.

On a larger range to cover 1 to 10 year averages, the overall economy is located from -1.7 to positive 3.00's. The problem with a positive GDP is many averages exist on the way to 3.0.

The 1 year average exists at 1.04, the 2 year at 1.62 and 5 year at 1.52 then comes a massive hurdle of averages at the 1.80's starting at 1.80, 1.83, 1.84, 1.85. Above 1.85 only then is considered 2.18. 2.34 and 2.40.

Since 1990, GDP experienced 11 quarters of negative growth. The current quarters of negative GDP matches the crash of 2008 as the 2 worst periods since 1990. In terms of actual numbers, the current quarters are worse than the crash of 2008 by very slim margins, -3.4 Vs -3.2. 

The crash of 2008 lasted for 5 consecutive and negative quarters while the current period factors to 4 successive quarters.

GDP contains a massive hurdle to achieve not only a positive number but a respectable level for economic growth. The first obstacle is 1.04 and this number is just the 1 year average. Only 9 more averages to go and much room for economic improvement on the policy front.

Historic GDP since 1990 normally trades from the 1 and 2 year averages to the 5 year. At -1.7, fails to register to normal averages.

Powell stated yesterday to economic problems are on the demand side. Opposite to Powell's Keynesian revelations to match Bernanke and Yellen, economic problems exist on the supply side. Demand is fairly constant while supplies represent problems  to shortages.

The 2nd problem and the most vital to lead GDP lower for longer is Democrats proposal to raise taxes. Trump, Reagan and Republicans of the 1920's demonstrated lower taxes results in  GDP skyrockets to 5 and 6% under Reagan and Trump while higher rates existed in the 1920's. 

Author

Brian Twomey

Brian Twomey

Brian's Investment

Brian Twomey is an independent trader and a prolific writer on trading, having authored over sixty articles in Technical Analysis of Stocks & Commodities and Investopedia.

More from Brian Twomey
Share:

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

By subscribing you agree to our Terms and conditions.

Editor's Picks

EUR/USD holds above 1.1750 due to cautious trade before FOMC Minutes

EUR/USD holds ground after four days of little losses, trading around 1.1770 during the Asian hours on Tuesday. The pair remains steady as US Dollar moves little amid market caution ahead of the Federal Open Market Committee December Meeting Minutes due later in the day, which could offer insights into the Federal Reserve’s 2026 outlook.

GBP/USD finds key support near 1.35 despite year-end grind

GBP/USD remains bolstered on the high end as markets grind through the last trading week of the year. Cable caught a bullish tilt to keep price action on the high side of the 1.3500 handle, though year-end holiday volumes are unlikely to see significant progress in either direction as 2025 draws to a close.

Gold gains on Fed rate cut bets, safe-haven demand

Gold price edges higher above $4,350 during the Asian trading hours on Tuesday. The precious metal recovers some lost ground after falling 4.5% in the previous session, which was gold's largest single-day loss since October. Increased margin requirements on gold and silver futures by the Chicago Mercantile Exchange Group, one of the world’s largest trading floors for commodities, prompted widespread profit-taking and portfolio rebalancing.

Solana risks correction within descending wedge as bearish bets rise

Solana hovers above $120 at press time on Tuesday after a nearly 2% decline on Monday. The SOL-focused Exchange Traded Funds see renewed interest after recording their lowest weekly inflow last week.

Economic outlook 2026-2027 in advanced countries: Solidity test

After a year marked by global economic resilience and ending on a note of optimism, 2026 looks promising and could be a year of solid economic performance. In our baseline scenario, we expect most of the supportive factors at work in 2025 to continue to play a role in 2026.

Crypto market outlook for 2026

Year 2025 was volatile, as crypto often is.  Among positive catalysts were favourable regulatory changes in the U.S., rise of Digital Asset Treasuries (DAT), adoption of AI and tokenization of Real-World-Assets (RWA).