May 2015 Flash Report

The message of the first quarter US GDP revision into contraction (down 0.7%) is partly one of bad weather, labor strikes, wider-than-expected trade deficits, shrinking business inventories, and weaker consumer spending. More importantly, it spotlights economic susceptibility to shocks when productivity, employment, and real GDP growth are low and central bank action is the only game in town. Without pro-growth policies, volatile growth data and financial asset prices will be the norm amid myriad concerns spanning a possible “Grexit,” the efficacy of Chinese policies, bond market liquidity, and the constant handicapping of the Fed’s moves in interest rates and the divergence in central bank policies that highlights less-than-robust global growth.

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