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Economic Weekly July 31, 2015: Modest Rebound in Q2 Paves Way for Fed to Keep
Dithering by Chief
Economist Chris Low,
Economist Jay Morelock, and Economic
Rebound in Q2 Paves Way for Fed to Keep Dithering
GDP grew at a 2.3% annual rate in the first quarter, little better than the
average growth rate of the prior three years. After a revised 0.6% Q1, growth
averaged just 1.5% in the first half. The FOMC is likely to conclude recent
acceleration is more important than the flat longer term trend. What they
should be looking at, however, is the economy’s lack of breadth, which has left
it unusually reliant on consumers for growth. Business investment ground to a
halt in Q1 and fell outright in Q2. The Fed’s new conundrum: How long can
consumers carry this economy on their own?
‘Transitory’ is a Relative Word
consequences of lower energy prices and a strong dollar as ‘transitory’ leaves
the Fed overestimating the ability for inflation to return to 2%. Lower prices are just beginning to work their
way through the economy. A widening US trade balance, oil economics that favor
buyers, and the Fed’s itchy...click here to read more.
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