The economy is healthy even as the Fed commences ‘recalibrating’ policy
Insight
August 15, 2016
US Economic Update: August 2016
GDP growth was soft in the June quarter although the underlying pace of economic activity appears stronger.
GDP growth was soft in the June quarter although the underlying pace of economic activity appears stronger.
The labour market also continues to show improvement; a strong July employment report has allayed concerns of a major slowdown in jobs growth and wages growth is strengthening. We still expect the Fed to hike rates in December, but now only see two increases in 2017.
June quarter 2016 GDP
GDP growth was soft in the June quarter, growing by an annualised 1.2 % qoq. The composition of growth remained largely similar to recent trends, with consumption the main driver while business investment declined again and the drag on growth from inventories entered its fifth straight quarter. The exception was residential investment, which had been growing strongly but declined in the June quarter.
Excluding inventories and net exports to derive a measure of domestic demand (‘final sales to domestic purchasers’) suggests that the underlying pace of the US economy remains in line with that seen over recent years. Final sales to domestic purchasers grew by 2.0% yoy in the June quarter, compared to 1.2% yoy for GDP.
For further details please see the attached document.
