What is Macro Pulse?

Macro Pulse highlights recent activity and events expected to affect the U.S. economy over the next 24 months. While the review is of the entire U.S. economy its particular focus is on developments affecting the Forest Products industry. Everyone with a stake in any level of the sector can benefit from
Macro Pulse's timely yet in-depth coverage.


Wednesday, June 16, 2010

Macro Pulse June 2010 -- Waiting with Finger in the Wind

Executive Summary

Time will tell whether the downward revision of 1Q2010 growth in U.S. GDP from 3.2 to 3.0 percent is just a temporary setback or a harbinger of a more protracted slowdown. There is plenty of evidence to support either viewpoint. We still forecast some growth through the rest of 2010, but additional data may cause a change in expectations.

Private-sector employment continues to drag on the economy. Non-farm payrolls expanded in May, but 95 percent of those jobs were temporary positions related to the 2010 Census; further, three-fourths of new private-sector jobs were created by temporary-help agencies. The bottom line is that the U.S. economy may have actually lost 11,000 permanent jobs in May.

Manufacturing continues to be a bright spot in private domestic investment, but construction spending – especially the residential component, now that the federal homebuyer tax credit has expired – is unlikely to add substantially to GDP growth for quite some time. Single-family starts and sales, and total completions all jumped by double-digit percentages in April, and the inventory of new homes fell to a four-decade low in absolute terms. However, permits of both single- and multi-family units retreated by double-digit percentages relative to March.

The volume of world trade expanded in March. Closer to home, U.S. exports and imports both rose in March; but the trade deficit widened mainly because of petroleum imports. The dollar’s dramatic appreciation against the loonie and euro in May is likely to dampen U.S. exports in the near-term.

The monthly average price of West Texas Intermediate crude oil fell in May, to $73.83 per barrel – a drop of $10.65 (-12.6 percent). The oil price retreat was not a result of just dollar strength – but rather a combination of concerns over sovereign debt, prospects for flat or falling consumption in the developed world, and rising OPEC production – evidenced by the fact that the euro price also dropped despite that currency’s depreciation against the greenback.

Click here to read the entire June 2010 Macro Pulse.

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