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August 31, 2005
Today's Economic News: More Of The Same
Which is to say nothing particularly great. Barry Ritholtz thinks that the revised report on second quarter GDP helped "stink up the joint," but it seems like more of a non-event to me. From Bloomberg:
U.S. economic growth slowed to a 3.3 percent annual rate in the second quarter as consumers, pinched by rising energy costs, spent less than the government first estimated.
Sure, but this is largely what we already knew:
The quarter's gross domestic product, the value of all goods and services produced in the U.S., compares with the 3.4 percent pace estimated a month ago and 3.8 percent growth in the year's first three months, the Commerce Department said today in Washington.
And if you like to look on the bright side of things, inflation measured by the Personal Consumption Expenditure Price Index looked a little better than was previously thought:
The government's personal consumption expenditures price index excluding food and energy rose at a 1.6 percent annual rate last quarter compared with a previously reported 1.8 percent rise. The core measure, which Fed policy makers monitor, rose 2.4 percent in the first three months of the year.
Barry has a better case with the Chicago Purchasing Manager's Index. From Reuters:
The Chicago purchasing management index for August came in at 49.2, sharply below market forecasts for a reading of 61.5 and under 50, which denotes a contraction. August's reading was the lowest since April 2003...
"On balance, (the PMI) is a dollar-negative number because it compounds concerns about the dampening affects of high oil prices on growth and supports the view U.S. interest rates may top out at a lower level than previously anticipated," said Alex Beuzelin, senior market analyst at Ruesch International in Washington.
Those concerns are expressed at Econbrowser too, following up yesterday's gloomy (but not unjustified) analysis of Katrina's effect on energy prices.
Elsewhere, the Skeptical Speculator shares the tough-today-but-not-throwing-in-the-towel-yet news from Japan. And while we are spanning the globe, The Nattering Naybob Chronicles provides a handy snapshot comparison of economic performance across the U.S., Europe, and Japan.
August 31, 2005 in Asia, Data Releases, Europe | Permalink
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Comments
Posted by:
Matt |
September 01, 2005 at 12:27 AM
"If it weren’t the hurricane it would have been some other reason they would stop."
Well I stick to my guns that it will be weak growth in Europe and low interest rates over here that are going to cramp the Feds style in a globalised environment. Too many opportunities for the carry trade.
Now, although not a Keynesian in letter, I certainly am one in spirit. And what did the grand old man of UK economics say: 'what use is an economist if after the storm is past all he can say is that we have had bad weather'.
But this works both ways, if the storm is a real - and not a metaphoric - one what use is the economist who can only say 'this is going to do a lot of damage'?
I think Dave has it more or less well-read. We will see a gasoline spike, we will see stresses and strains, we will probably need to revise down US growth forecasts a little, but we will not see an imminent recession.
I'll go further: I don't expect a recession in the US in 2006. Any forecast further out is foolhardy.
China will stay strong, but maybe a touch weaker in 2006,as will India and Turkey, and Germany (I don't think you can talk of Europe all in one breath) and Japan will not have a spectacular recovery, but nor will they go crashing anywhere. They will continue to dip in-and-out between negative growth and the odd quarter of stunning growth, following a trend line of maybe between 0 and 1%. Risk economies where you could see fireworks:UK and Italy.
There, that's Edward's global outlook for 2006 in a nutshell.
Posted by:
Edward Hugh |
September 01, 2005 at 03:55 AM
Dave,
Thanks for the mention.
Posted by:
The Nattering Naybob |
September 02, 2005 at 01:04 PM
Looks like the Fed has one more hike then they are done. Why am I not surprised? If it weren’t the hurricane it would have been some other reason they would stop. Seriously, this Fed has a history of grossly accommodative monetary policy. Does anyone actually believe they are going to invert the yield curve? They have no credibility and the bond market knows it. If they really thought rates needed to be higher they would have been done hiking rates months ago. When you create asset bubbles you might as well condone them.