Image Source: Pixabay

• Last night, the United States revealed its Q3 GDP growth figures for 2023.
• This morning, the United Kingdom likewise revealed its latest 2023 GDP figures.
• The numbers showed two very different economies: one growing, one shrinking.

The festive season tends to be an emotional one for many – and that includes the markets. This year in particular, economies are waiting with baited breath to see if the United States has managed to stick the soft landing they’ve been aiming for, or if inflation will prove stickier still as we head into the new year.

But perhaps what’s not always apparent to the average investor watching the headlines roll by, is that not all choirs will be singing from the same hymn sheet this Christmas. It’s sometimes easy to forget that the American economy is currently in a very different place to, well, everywhere else.

And while a rising dollar often lifts many boats, it’s not to be confused with the economic realities of elsewhere.

United States reveals disappointing GDP growth figures

Today has provided investors everywhere with a great example of this. The United States’ Bureau of Economic Analysis released its latest quarterly GDP figures last night on December 21^st. These are the last ones for the 2023 year that arguably show the ‘real’ state of the economy, without data being skewed by the buying frenzy that is the holiday season, Black Friday, Cyber Monday and Thanksgiving.

The readings were interesting. Real GDP rose 1.5 percent, from 2.1 percent YoY in Q2 to 4.9 percent YoY in Q3. However, this was disappointing for many, given the BEA’s previous estimate of 5.2 percent growth and the general bullishness currently in the American air.

Profits of domestic financial corporations also fell below expectations, rising $9 billion instead of the anticipated $9.8 billion.

… However, it’s safe to say that the United States economy is growing. Analysts and investors alike are just quibbling about how much it should be accelerating, going into 2024.

United Kingdom releases Q3 2023 GDP figures

Meanwhile, this morning, the United Kingdom released their last GDP growth rate figures in 2023.

The UK’s economy has contracted marginally (by 0.1 percent) QoQ in the same time that America’s grew by more than four percent. As the Office for National Statistics said earlier today:

UK gross domestic product (GDP) is estimated to have fallen by 0.1 percent in Quarter 3 (July to Sept) 2023, revised down from a first estimate of no growth. UK GDP is now estimated to have shown no growth in Quarter 2 (Apr to June) 2023, revised down from a previously estimated increase of 0.2 percent, while growth in Quarter 1 (Jan to Mar) 2023 and all quarters of 2022 is unrevised… In output terms, there was a 0.2 percent fall in the services sector in the latest quarter, which offset a 0.4 percent increase in construction output and a 0.1 percent increase in the production sector.”

In other words: the UK economy is shrinking, not growing – but at least English data wizards are better at estimating and need to revise them a lot less.

With these results in front of us, the two countries’ very different interest rate announcements (America’s bullish announcing of rate cuts to come soon, versus the BoE’s much more cautious announcement) suddenly make much more sense.

More By This Author: