Final US GDP Reading Slower Than Expected - A Harbinger Of Worse To Come?

Daily Forex Fundamentals | Written by DailyFX | Sep 26 08 13:16 GMT |

The Commerce Department's final measure of US growth a disappointment to policy makers and dollar bulls. After the marked, positive revision to the reading from the advanced to preliminary figures (1.9 percent to 3.3 percent), confidence boomed as many perhaps believed such a strong clip of growth could withstand a battering through the second half. However, the final reading on the expansion through the three months ending in June would knock the optimism down a peg by lowering the broad activity gauge to 2.8 percent. This may seem to be a modest revision, but it amplifies the dour forecasts for growth through the second half of the year. With the consumer responding to rising unemployment and fading wage growth by tempering spending habits, exports losing ground with global growth cooling and business investment curbed by a financial crisis and record raw material prices, forecasts for the third quarter are not promising - though the dollar may not be pricing in this prognosis quite yet. Looking at the details of the final 2Q reading, the weight on the indicator would be the most necessary components. Personal consumption was revised down to 1.2 percent from 1.7 percent (many analysts believe we won't see any more growth from this sector again this year). Exports edged down from 13.2 percent to 12.3 percent. On the positive side, private investment didn't suffer as painful a contraction as the preliminary or advanced number had suggested. Business and consumer investment fell 11.5 percent - still the biggest weight on growth. DailyFX Disclaimer Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources.