- U.S. GDP grew at an annualized pace of 33.1% in Q3 2020, its fastest pace ever
- The U.S. Consumer Confidence Index registered 100.9 in October, little changed from 101.3 in September
- The ECB’s key interest rate is currently set at -0.5%
Top Three Market Headlines
U.S. GDP Rebounds at Record Rate in Q3: The Commerce Department announced last week that U.S. gross domestic product (GDP), a measure of goods and services produced, expanded at an annualized pace of 33.1% in the third quarter. Following on the heels of a 31.4% second quarter decline, the Q3 growth rate was fastest pace ever recorded and exceeded economists’ expectations of 32% growth. Rebounds in consumption, business equipment investment, and residential investment drove the strong Q3 number; however, lower levels of government spending and non-residential investment held back the overall result. While the initial recovery of GDP in Q3 was stronger than anticipated, the economy remains 3.5% smaller than it was in the final quarter of 2019.
Consumer Confidence Holds Steady: The Conference Board, a private research group, reported last Tuesday that its Consumer Confidence Index, which reflects consumers’ current and six-month future outlook of the economy, registered 100.9 in October, little changed from the 101.3 reading in September. Recent months’ readings remain much stronger than the springtime low of 85.7 in April. Consumers reported feeling better in October about the current environment, as the Present Situation component of the Index increased to 104.6 from 98.9 last month; on the other hand, consumers’ future outlook dimmed, as the Expectations Index decreased to 98.3 from 102.9 in September.
European Central Bank Prepares Support for Eurozone: The European Central Bank (ECB) announced last week that it intends to adopt additional measures to support Eurozone economies as key countries reenact coronavirus restrictions in response to rising Covid-19 case counts. ECB President Christine Lagarde warned that the Eurozone economy could slow significantly over the coming months as lockdowns begin. The additional support measures could take the form of more bond purchases and interest rate cuts. The ECB is currently buying €1.35 trillion of government and corporate debt through at least June 2021 while also maintaining its key interest rate at -0.5%.