US Economic Update – US GDP – Q2 2012

US GDP grew by 0.5% qoq in the September quarter, stronger than in the previous quarter but still only modest. The strengthening in growth was due to consumption, housing investment and government spending picking up. Of concern, however, was a decline in business investment.

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  • US GDP grew by 0.5% qoq (or 2.0% annualized) in the September quarter, stronger than in the previous quarter but still only modest.
  • The strengthening in growth was due to consumption, housing investment and government spending picking up. Of concern, however, was a decline in business investment. The drought also detracted from growth.
  • We expect that the drawn-out recovery will continue. While the fiscal cliff may cause some turbulence, if it is scaled back (as expected) growth will likely strengthen in 2013. We expect GDP will grow by 2.2% in 2012 (previously 2.1%) and 2.4% in 2013.
  • It is likely that the Fed will announce additional asset purchases to start following the completion of Operation Twist at the end this year.

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