US Economic Update – October 2012

GDP growth was only 0.3% qoq in the June quarter and partial indictors suggest that is was only slightly higher in the September quarter. This is consistent with the finding of the Federal Reserve’s ‘Beige book’ released this week.

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  • While the U.S. economy has been growing at only a modest rate, the unemployment rate dropped sharply in September to its lowest level since January 2009.
  • A big uncertainty is the direction of business investment. We expect a recovery in business investment from the December quarter, consistent with still reasonable fundamentals but there is a downside risk.
  • September quarter GDP is tracking slightly higher than in the June quarter, and is expected to strengthen further over the rest of 2012 and into 2013. We are forecasting GDP growth of 2.1% in 2012 and 2.4% in 2013.

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