We are in a new world this year in terms of the economic recovery. This year we've seen earnings beating the estimates from before the bar was lowered a few weeks before the reports. For the past few years we saw estimates lowered and the lowered estimates beaten. It was a game of misdirection as the beats were meaningless because the bar was lowered so much. The improvement this year makes this recovery seem real after it was phony for so long.

We saw the same downgrades to expectations for GDP reports in the past few years as you can see in the chart below. The estimate for 2015 GDP growth was an unrealistic 3.5% before tumbling down to 2.5%. Now, for the first time in 4 years, the GDP estimates are increasing for both 2017 and 2018. The estimates for 2018 are tough to put much weight on because it's so far in the future. However, the 2017 estimates are real as the Q2 GDP revision came out today showing GDP grew 3.0% instead of the 2.6% initially reported. You can argue this means the initial guesses in March about Q2 GDP were right, but that's a false comparison because the projections are for the first estimate of GDP. It's a silly way of looking at GDP because the third revision tells us the real numbers. The reason it's done this way is instant gratification. If the projection was for the third revision, you'd need to wait 3 months to see if the prediction was accurate.

This means about half of the GDP information is in which makes the 2017 estimate for 3% GDP growth seem achievable. Bears are now saying the first half GDP growth was 2.14% and the average from 2010 to 2016 was 2.14%. That is accurate, but it ignores the large turnaround from last year and the heightened expectations for Q3 growth. If 2H GDP is 2.15% or higher, this year will see above average growth. There's still a lot of information left to be reported, but it would be wrong to ignore the recent acceleration in growth. The only obstacle in the way of a great year is the possible effects which might be coming from Hurricane Harvey.