• The large fall in March quarter GDP is not matched by other indicators. Data for June quarter suggest growth will resume.
• Inflation has strengthened in recent months. With slack in the economy declining – not only in the labour market but also in other sectors – inflation looks set to continue rising, but only gradually.

A tale of ‘two’ economies

At the start of the Charles Dickens novel A Tale of Two Cities ‘It was the best of times, it was the worst of times…’. If the latest data are to be believed, something similar could be said of the U.S. economy.

The GDP data were revised late last month to show a recession like fall in GDP in the March quarter of -2.9% qoq (annualized). In contrast, the labour market recovery showed signs of strengthening. The unemployment rate fell another 0.2ppts in June to 6.1% and non-farm employment grew by 2.2% in the June quarter (annualized), its fastest quarterly growth rate in over two years.

For further analysis download the full report.

• US Economic Update – July 2014 (PDF, 126KB)