● US Q3 GDP growth revised up to 2.1% | Reuters
● Consumer confidence falls to 14-mo low in Nov | MarketWatch
● Richmond Fed: “manufacturing activity slowed” in November | Richmond Fed
● US Q3 corporate profits fall at steepest rate since recession | WSJ
● US home prices rise 5.5% YoY in Sep | CNBC

Fed Chair Janet Yellen yesterday reaffirmed the case for keeping interest rates near zero percent and raising rates slowly in the future. But the Treasury market seemed to have a mixed reaction. The 2-year yield–widely followed as the most-sensitive spot on the curve for rate expectations—ticked higher, rising to a five-and-a-half-year high of 0.94% yesterday (Nov. 23), based on constant maturity data at Treasury.gov. The benchmark 10-year yield, by contrast, slipped to 2.25%–comfortably below the recent high of 2.50% from mid-June.
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● Chicago Fed: US growth rate ticks up in Oct | Chicago Fed
● PMI: US mfg growth slows to 2-year low in Nov | Markit
● Fed’s Yellen argues for cautious policy for rate hikes | Reuters
● US existing home sales fall in Oct after sharp Sep gain | HousingWire
● German business sentiment ticks higher in Nov | Ifo
● German Q3 GDP growth confirmed at 0.3% quarterly growth | Reuters

US economic growth continued to weaken in October, according to this morning’s update of the Chicago Fed National Activity Index’s three-month moving average (CFNAI-MA3). Last month’s reading slipped to -0.20, the lowest since Mar. 2015. But even after the latest decline, this benchmark of economic activity remains well above its -0.70 tipping point that marks the start of recessions, according to Chicago Fed guidelines. Meantime, there are signs that the trend will firm in the final months of the year. One clue is the Atlanta Fed’s current GDPNow estimate of fourth-quarter GDP growth: 2.3% (as of Nov. 18), which reflects a moderate improvement over Q3’s sluggish 1.5% increase.
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The US economy is on track for a modest rebound in the fourth quarter, according to GDP projections from several sources. Although it’s still early for developing robust estimates for Q4, most economists are looking for improvement over Q3’s tepid 1.5% rise in GDP (seasonally adjusted annual rate).
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Emerging-markets equities enjoyed a solid rise last week among the major asset classes, based on a set of proxy ETFs. Vanguard Emerging Markets Stock (VWO) posted a solid 4.5% total return for the five days of trading through Nov. 20, edging out the number-two performer for the week, US real estate investment trusts (REITS), based on Vanguard REIT (VNQ).
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● Eurozone Composite PMI rise to 4-1/2 year high in Nov | Markit
● Germany Composite PMI ticks up to 3-mo high in Nov | Markit
● France Composite PMI slips to 3-mo low in Nov | Markit
● Kansas City mfg index in Nov: first positive reading since Feb | KC Star
● Eurozone consumer confidence index rises in November | Reuters

● Income Inequality: Why It Matters and Why Most Economists Didn’t Notice
By Matthew P. Drennan
Summary via publisher (Yale University Press)
Prevailing economic theory attributes the 2008 crash and the Great Recession that followed to low interest rates, relaxed borrowing standards, and the housing price bubble. After careful analyses of statistical evidence, however, Matthew Drennan discovered that income inequality was the decisive factor behind the crisis. Pressured to keep up consumption in the face of flat or declining incomes, Americans leveraged their home equity to take on excessive debt. The collapse of the housing market left this debt unsupported, causing a domino effect throughout the economy. Drennan also found startling similarities in consumer behavior in the years leading to both the Great Depression and the Great Recession.
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The three-month average of the Chicago Fed National Activity Index (CFNAI) is expected to decline in the October update that’s scheduled for Monday (Nov. 23), based on The Capital Spectator’s average point forecast for several econometric estimates. The projection for -0.21 reflects a modest decline from -0.09 in September, which indicates US economic activity that’s slightly below the historical trend rate of growth. Only negative values below -0.70 signal an “increasing likelihood” that a recession has started, according to guidelines from the Chicago Fed. Using today’s estimate for October as a guide, CFNAI’s three-month average is expected to reflect an expansion that’s moderately below the historical trend but still above the tipping point that marks the start of a new US recession.
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