Weekly Market Commentary 11/24/2017

As the economy may be set to register another 3.0% growth rate in the current quarter – which would be the third, and longest, stretch to hit that pace since 2004 – hopes are rising that the expansion has finally broken out of the lackluster 2.0% growth trajectory viewed as the new normal by the consensus of economists. Not to ruffle feathers just after the Thanksgiving holiday, but it’s highly unlikely that the 2.0% barrier has been broken. To exceed that speed limit for a sustained period without stoking inflation would require faster labor force growth than is indicated by demographic trends along with a pick- up in productivity growth, which would reverse a declining trend over the past decade. Neither is expected over the near term, although the seeds for stronger productivity growth may be falling into place.