Friday, October 21, 2011

Misc: Solid Auto Sales seen in October, Merrill Lynch ups GDP Forecast

by Bill McBride on 10/21/2011 01:50:00 PM

From the LA Times: October auto sales expected to rise

Auto research company J.D. Power and Associates estimates an annual industry sales pace of 13.1 million vehicles for the month, about the same as September and a big jump from earlier in the year.
Auto sales in Q3 were up about 3% over Q2. Even though this estimate for October is about the same as September, sales in Q4 would be up about 5% over Q3 even if sales were flat all quarter (because July and August were weak). This will give a boost to Q4 GDP.

And from Merrill Lynch this morning:
Our tracking model of third quarter GDP has been running well ahead of our former official estimate of 1.8% growth. Today, in our US economic weekly, we officially revise up our Q3 forecast to 2.7%. We expect some of this strong momentum to carry over into the fourth quarter. We bumped up our Q4 estimate to 2.3% from 2.0%.
I'm including this because most of the revisions have been down in recent quarters. But it is important to remember this is still sluggish growth.

Dean Baker writes: Is the Double Dip Drifting Away?
The economy looks to be growing in a range of 2-3 percent. This is roughly fast enough to keep even with the growth of the labor force. That implies that we are making zero progress in putting people back to work.

Unfortunately ... this slow growth is likely to be seen as good. It isn't ...
Dr. Baker makes some key points: Sluggish growth isn't good, beating "incredibly low expectations" isn't great, and employment is just keeping "even with the growth of the labor force". And we need to remember there are still significant downside risks.