How is the Economy, July 2014
As usual, economic indicators contradict each other. The Bureau of Economic Analysis (BEA), National Income and Product Account (NIPA) tables for Q1, 2014, are dismal. The GDP growth rate was down 2.9% and Gross Private Domestic Investment (GPDI) is down 11.7 percent. We need GPDI to increase for future growth. GPDI indicates research and development (R&D) in new products and services.
However, the S&P/Case-Shiller US National (Home Price) Indices are up 10.35% over the past year. The US Census Bureau shows New Home Sales up 18.6% in May and New Residential Construction down 6.5%. That means the housing market is not glutted, and home prices will go up. Consumers will have more equity in their own homes. The stock market is going up now reaching new highs. Consumers have more assets to spend and invest with.
Unemployment was down to 6.1% in June, according to the Bureau of Labor Statistics (BLS). More people are working and owning homes.
Therefore, the forecast is as follows. Consumers will spend more, but mostly on existing products instead of new ones. Economic growth will increase as companies meet consumer demand.
Clint Kennedy
Basic Economics Today LLC
Copyright © July 2014
However, the S&P/Case-Shiller US National (Home Price) Indices are up 10.35% over the past year. The US Census Bureau shows New Home Sales up 18.6% in May and New Residential Construction down 6.5%. That means the housing market is not glutted, and home prices will go up. Consumers will have more equity in their own homes. The stock market is going up now reaching new highs. Consumers have more assets to spend and invest with.
Unemployment was down to 6.1% in June, according to the Bureau of Labor Statistics (BLS). More people are working and owning homes.
Therefore, the forecast is as follows. Consumers will spend more, but mostly on existing products instead of new ones. Economic growth will increase as companies meet consumer demand.
Clint Kennedy
Basic Economics Today LLC
Copyright © July 2014
