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LAST UPDATE:10/13/2018
CQM 101218 CQM 101218

The SP500 index plunged 3.3% on October 10 and 2.1% on 11, though it recovered 2.1% on October 12. Some people have begun to worry about a serious recession like the Lehman Shock of September 2008. Current economic conditions are quite different from they were in the Lehman Shock period. CQM shows the growth rate of real GDP on both the expenditure and income sides to be more than 3.5%. Similarly, PCA forecasts real GDP is growing at an annual rate of 3.54% for 2018Q3. All real GDP forecasts have upward trends (graphs 1 and 2.1c), meaning there is no worry about a recession. The plunges in the stock price index on October 10 and 11 are likely to be a just correction to return to the normal level. When real GDP grows at an annual rate of 2.5%-4.0% in 2018, the adequate range of SP500 seems to be 2650-2880.

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