• The recent weakness in jobs growth continued into May. It is probably, in part, a correction to the surprisingly strong growth in early 2012. Indicators suggest that June quarter GDP growth will maintain the previous quarter’s modest pace.
• While we still expect GDP growth to strengthen in the second half of the year we have trimmed our growth expectations for 2012 (from 2.3% to 2.2%) and 2013 (from 3.1% to 2.9%).
• Recent developments have raised the chance of further Fed action.  If early action were taken the most likely form would be a change to the Fed’s forward guidance or an extension of Operation Twist. Further QE is still possible, particularly if labour indicators remain soft or the Euro-zone’s problems worsen.

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USA Economic Update – 8 June 2012  (PDF, 418kb)