Tuesday, July 16, 2013

A Grim Outlook for the Second Quarter

The second quarter ended a couple of weeks ago, at the end of June, and the first estimate of the U.S. gross domestic product will be out at the end of this month, on July 31st. GDP for the first quarter came in at 1.8 percent growth, but the prevailing wisdom now seems to be that the second quarter won't be even as strong as that modest growth.

J.P. Morgan now estimates second quarter growth at 1.0 percent, and that's at the high end of the range. Goldman Sachs estimates it at 0.8 percent, and Barclays has it at 0.5 percent.

What's the problem? According to figures released yesterday, retail sales increased by just 0.4 percent in June, well below previous estimates, and the May figure was revised downward as well. The increase in business inventories was a similarly disappointing 0.1 percent in May. We shall see in a couple of weeks what this all adds up to.

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