With growth of 2Q2010 real gross domestic product (GDP) coming in at only 2.4 percent – the second quarterly slowdown in the rate of growth – it appears the U.S. economy is caught in a downdraft and heading toward a period of mediocre growth or outright recession. The consumption-dependent U.S. economy is struggling because of drags from persistently high unemployment (especially among young adults) and households either paying down or defaulting on debt.
Foreward-looking manufacturing data provided conflicting views of the future, with various reports showing either shrinking and expanding new orders. New non-manufacturing orders, by contrast, grew at a faster pace in July. Regardless, a drop-off in the availability/desirability of credit is among the factors hampering the ability of businesses to expand operations and hire employees.
Builders completed a significantly higher number of homes in June but had few new projects to turn to. Prospects for a substantial improvement in housing are slim as total permits nudged barely higher in June. Sales of new homes were fairly brisk by recent standards, while resales declined.
Interest rates are presently at/near historic lows; but because of continued deficit spending and corporate re-financings, competition for credit will eventually drive interest rates higher.
A weaker dollar and realization the United States is no longer the world’s largest energy consumer pushed crude oil’s spot and futures prices higher in July.
Click here to read the entire August 2010 Macro Pulse newsletter, which contains an explanation of the graph shown above.
The Macro Pulse blog is a commentary about recent economic developments that affect the forest products industry. That commentary provides context for our 24-month forecast, which is contained in the monthly Economic Outlook newsletter available through Forest2Market. The monthly Macro Pulse newsletter summarizes and gives a convenient point of access to the previous 30 days of commentary available on this website.