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US 2Q GDP growth exceeds expectations

Published Thursday, July 31st, 2014

The US economy grew at 4% in the second quarter, far more than expected, and it was driven by both consumption and a leap in business investment. The first quarter contraction was revised from -2.9% to -2.1%

A couple of hours after the figure was released the Federal Reserve concluded their meeting and issued a statement confirming that another $10 billion of tapering will occur next month. They noted an improvement in the US economy, the labour market and inflation but still see a “significant underutilisation” of labour resources.

Monetary policy will continue to be accommodative for a “considerable time”, but one member of the Committee objected to this commitment. Sadly it is upon such nuances that markets move and this, together with the statement, was read as pointing to interest rates rising a little earlier than previously thought. The result was an increase in Treasury yields and a stronger dollar.

to read the rest of the report, please click here 

Posted by David Hufton