(GuruFocus, October 29, 2009) This morning, BEA reported that during the third quarter, US GDP grew at a pace of 3.5%, slightly stronger than the consensus estimate of the economists surveyed. Trying to make sense of the numbers, Fox Business News brought out Goldman Sachs' Abby Joseph Cohen (see the video below).
Abby Cohen is famous for predicting the bull market of the 1990s early in the decade. However, she failed to predict the dramatic stock market decline of the early 2000s and developed a reputation as a so-called "perpetual bull" and was ridiculed for her continuous bullish predictions after March 2000 as market index fell. Her reputation was further damaged when she failed to foresee the great crash of 2008. On a CNBC appearance in March 2008, she predicted S&P 500 at 1550 by end 2008.
With that in the background, here is her take on the GDP number which I found quite to the point:
Watch the latest business video atFOXBusiness.com
(Click here if you do not see the video player).
Take-home points:
1. GDP growth for 4Q09 and early 2010 will not be as strong as 3Q09 because the abate of government stimulus and end of the business inventory replenishment
2. The Federal deficit will come down from the current 10-11% of GDP to something like 3-4% in the next couple of years as the economy improves, tax revenue increases and withdrawal of stimulus measures.
Abby Cohen is famous for predicting the bull market of the 1990s early in the decade. However, she failed to predict the dramatic stock market decline of the early 2000s and developed a reputation as a so-called "perpetual bull" and was ridiculed for her continuous bullish predictions after March 2000 as market index fell. Her reputation was further damaged when she failed to foresee the great crash of 2008. On a CNBC appearance in March 2008, she predicted S&P 500 at 1550 by end 2008.
With that in the background, here is her take on the GDP number which I found quite to the point:
(Click here if you do not see the video player).
Take-home points:
1. GDP growth for 4Q09 and early 2010 will not be as strong as 3Q09 because the abate of government stimulus and end of the business inventory replenishment
2. The Federal deficit will come down from the current 10-11% of GDP to something like 3-4% in the next couple of years as the economy improves, tax revenue increases and withdrawal of stimulus measures.
