Macro View July 29, 2012

My apologies for another technical Macro View this week. My intention was to analyze Q2 GDP advance and highlight dangers under the hood. But I came across a few charts that I felt were more important to discuss and since the Morning Brief is already too long I opted to hijack the Macro View.

Quickly on GDP data, a summary by component is listed below. What stands out is the drop in the consumer component. At 70% of total economic output the drop from 1.72% in Q1 to 1.05% in Q2 shows how quickly the consumer is retrenching. The goods side of the consumer component barely expanded at 0.18% down from 1.11% in Q1.

The other piece relates to net trade where it went from flat at 0.06% in Q1 to (0.31%) in Q2. As the global economy weakens further, this component is going to become a larger headwind to economic growth. Which puts more pressure on the consumer to hold up the economy. And if the consumer continues to falter, another headwind

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