GDP +2.3% is Weak.

2ndQ2015 GDP Initial

– Real GDP quarter/quarter seasonally adjusted, annualized  +2.3%. Previous  was revised up to +0.6%
– GDP price index quarter/quarter seasonally adjusted, annualized +2.0%. Previous was +0.1%.
– Real Final Sales of Domestic Goods was +2.4%.  This filters out imports, exports and business spending.

Coming after a miserable 1stQ a reading of +2.3% is weak.

Average GDP growth has been about +2.3% for the past 3 years.  That is weak.

The present state of affairs indicates that the dual mandate of the Federal Reserve: keep unemployment low and keep inflation in check misses the point that keeping GDP growing is at least as important.  The Fed is in a spot where extremely low interest rates and massive expansion of Monetary base have failed to spur GDP.  The Fed may want to reduce money supply simply so that they can increase it again if necessary.  Increasing rates before problems in the EU and China are fixed would be a big mistake.  Higher rates in the U.S. would hurt Europe at a time when it doesn’t need hurting.

 

Initial Jobless Claims (week ended 7/25/2014)

– New Claims  267,000. Previous was 255,000
– 4-week Moving Average 274,750. Previous was 278,250.