The Bureau of Economic Analysis (BEA) released the first of three estimates for third quarter Gross Domestic Product (GDP) and it was stronger than anticipated. Inflation adjusted (real) GDP grew at an annual rate of 3.5 percent versus the 3.3 percent expected. Personal consumption expenditures (comprising about 70 percent of GDP) grew 4.0 percent compared to predictions of 3.3 percent.
Inflation was also lower than analysts were anticipating. The GDP price index grew at an annual rate of 1.7 percent compared to predictions of 2.1 percent and second quarter's yearly rate of 3.0 percent. Core price inflation (less the more volatile food and energy sectors) was 1.6 % versus 1.8 % expected and second quarter's 2.1 %.
In other economic news, new jobless claims were up slightly, but continuing jobless claims hit a 45-year low. Consumer and small business confidence are at or near record levels. Manufacturing is making a resurgence. The labor market is record strong. Profits are strong. However, U. S. stock markets, led by the tech sector, erased all of this year's gains. If the economy is so strong why is the stock market dropping? For one thing, the stock market tends to go up and down regardless of the economy. But there are also threats to the economy which are being incorporated into stock prices.
Policy actions of the Federal Reserve have the markets concerned. The strong economy has encouraged the Fed to increase interest rates. During the eight years of the Obama presidency, the Fed increased its target for the Federal funds rate twice, and one of those was after President Trump had been elected. In less than two years of the Trump presidency, the Fed has increased its Fed funds rate target six times, and is predicted to increase it again in December, four times in 2019 and twice in 2020. In addition to raising the federal funds rate target, the Fed has also been reducing its balance sheet which is adding further upward pressure on interest rates.
Higher interest rates slow inflation which is one of the mandates of the Fed. But higher interest rates simultaneously reduce profits, discourage investment, and raise the value of the dollar against other currencies. A stronger dollar reduces profits for our multinational companies while discouraging U. S. exports and encouraging imports. Weaker economies in China and much of the emerging world, Italian debt restructuring and uncertainty with Middle Eastern oil production support appreciation of the U. S. dollar. Too strong a dollar can be considered a threat.
Christians are not exempt from problems and threats. Some of our problems can be self-inflicted, and the Lord has promised to give us wisdom and discipline (James 1:5, 2 Tim. 1:7). Other problems can originate with our adversary through our thoughts or actions, others, circumstances or situations. The Word gives us principles to combat all of the schemes of the devil.
Specifically, we should recognize that our strength in in the Lord and in the power of His might. Our strength is not in our own power or might, but by His Spirit. Second, we should recognize that our struggle is not against others, but against the powers of the enemy. In a highly organized effort to derail God's purposes, the enemy aggressively tries to derail to us from fulfilling God's purpose for our lives. But the good news is that he was defeated at the cross. Jesus announced that it was finished. Third, we should put on the armor of God.
Finally, my brothers, be strong in the Lord and in the power of His might. Put on the whole armor of God that you may be able to stand against the schemes of the devil. For our fight is not against flesh and blood, but against principalities, against powers, against the rulers of the darkness of this world, and against spiritual forces of evil in the heavenly places. Therefore take up the whole armor of God that you may be able to resist in the evil day, and having done all, to stand (Eph. 6:10-13).
"And he said to me: 'This is the word of the Lord to Zerubbabel, saying: Not by might nor by power, but by My Spirit, says the Lord of Host" (Zech. 4:6).
Scriptures tell us to put on the full armor of God. We should gird our loins with truth, put on the breastplate of righteousness, shod our feet with the preparation of the gospel of peace, take up the shield of faith, put on the helmet of salvation and use the sword of the Spirit, which is the Word of God (Eph. 6:14-17). Note that the Scriptures say "the full armor." We wouldn't be a prepared soldier without the shield of faith. Our loins would be exposed without truth. Without the Word of God, we would be without an offensive weapon.
We are also told to pray in the Spirit at all times. In the unseen world, which is impacting our physical world, we might not know how to pray. But the Spirit knows. He intercedes for us according to the will of God. The will of God will impact our physical world. His will is accessed by us through prayer, especially when we are praying the perfect will of God by praying in the Spirit.
"Pray in the Spirit always with all kinds of prayer and supplication. To that end be alert with all perseverance and supplication for all the saints" (Eph. 6:18).
"Likewise, the Spirit helps us in our weaknesses, for we do not know what to pray for as we ought, but the Spirit Himself intercedes for us with groanings too deep for words. He who searches the hearts knows what the mind of the Spirit is, because He intercedes for the saints according to the will of God" (Rom. 8:26-27).
Dr. James Russell is a professor of economics at Oral Roberts University.
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