July 13, 2012
2Q 2012 Market Environment
U.S. Economy
The “third” estimate for first quarter GDP was released showing a growth rate of 1.9%, unrevised from the prior estimate. During the first quarter, the major contributors to GDP growth were consumer spending which added 1.74% to GDP growth and fixed investment which added 0.74% to GDP growth. Business inventories, which added 0.1% to GDP growth, increased by $54.4B in the first quarter following a $52.2B increase in the fourth quarter. Corporate profits decreased by $6.4B in the first quarter following an increase of $16.8B in the fourth quarter. Government expenditures continued to trend downward subtracting 0.8% from GDP growth. The unemployment rate was unchanged at 8.2% in June. The number of unemployed (12.7M) and long-term unemployed (5.4M) both remained unchanged. In June the labor force participation rate and employment-population ratio were unchanged at 63.8% and 58.6%, respectively. The average duration of unemployment is currently 39.9 weeks. Non-farm payroll gained 80K jobs in June while private-sector employment added 84K jobs. Employment grew by an average of 75K per month in the second quarter versus an average of 226K during the first quarter.
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