Morgan Stanley: U.S. Economy Speeding Up, Not Slowing Down

Ajit Agrawal of Morgan Stanley released a note to clients on Thursday noting that the U.S. economy, despite numerous headwinds, continued to expand in October. "Our data is consistent with underlying GDP growth of +5.8 percent in the third quarter and 3.3 percent in fourth quarter," Agrawal wrote. Investors have plenty of reasons ranging from a volatile stock market, Ebola concerns and International growth issues to conclude the U.S. economy has suffered. This is certainly not the case, according to Agrawal who notes that layoff dataset showed private-sector layoffs fell to a new cycle low. The analyst also sees a "solid" increase in building permits and a "moderate rebound" in retail sales. Additionally, business formations posted a month-over-month growth in October. However, a main source of weakness is pending home sales, where sequential declines despite lower mortgage rates was seen in October. Bottom line, Agrawal notes that the U.S. Private Sector has expanded for nine consecutive months, the longest uninterrupted stretch in four years which solidifies the argument that the U.S. economy is strong heading in to 2015.