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Daily update

  • The latest guess at UK GDP in the fourth quarter left headline numbers unchanged, while the details shifted. Strike action undermined fourth quarter activity. The data will be revised for years to come, and history suggests it will be revised stronger. Things like productivity gains from flexible working and additional income streams from side hustles are harder to capture in early GDP guesses.
  • There will be a further guess at US GDP in the fourth quarter. The expectation is for little change. Of course, revising GDP matters little to equities or politics. Earnings growth reflects actual activity—over time, the (relatively minor) part of GDP measuring listed corporate activity should converge with earnings. Politically, spin matters more than substance—what voters feel about the economy matters more than what is actually happening.
  • German retail sales were weaker than expected in terms of the monthly change, but of course the previous data was revised stronger (as German data nearly always is), helping to boost the yearly growth figure.
  • Assorted inflation figures are due tomorrow—consumer prices from France and Italy, and the US personal consumer expenditure deflator. Most inflation figures are now within an acceptable range (for a 2% target, anything between 1% and 3% is on target, practically speaking).

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