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GDP growth slows to 1.5%

Stacey Vanek Smith Jul 27, 2012
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Cargo containers are stacked on a ship docked at the Port of Oakland in California. Economic output in the United States hasn't caught up yet to pre-pandemic levels. Justin Sullivan/Getty Images

GDP growth slows to 1.5%

Stacey Vanek Smith Jul 27, 2012
Cargo containers are stacked on a ship docked at the Port of Oakland in California. Economic output in the United States hasn't caught up yet to pre-pandemic levels. Justin Sullivan/Getty Images
HTML EMBED:
COPY

Stacey Vanek Smith: The Commerce Department just announced Gross Domestic Product ticked up 1.5 percent in the second quarter. That’s down from a growth rate of 2 percent in the first part of the year. GDP is a measure of all of the goods and services the country produces. It’s considered to be one of the most important measures of economic growth.

Here to help us make sense of all this is Chris Low, Chief Economist with FTN Financial. He joins us live. Good morning Chris.

Chris Low: Good morning, Stacey.

Smith: Chris, 1.5 percent growth — Good news? Bad news?

Low: Well, from the markets perspective, it’s just about the worst you could get, because it’s a slowdown — which nobody likes — but it’s not necessarily enough of a slowdown to push the Fed to take action next week. So we’re left sort of scratching our heads, waiting for more information.

Smith: That would be the Federal Reserve potentially adding more stimulus into the economy or not… How significant is it, Chris, that growth is slowed from 2 percent in the first part of the year to 1.5 percent?

Low: You know, as we dig down into the details, one of the things that jumps out is: Remember that really warm weather in the winter? So, car sales were strong and construction was strong; not surprisingly, all of those weakened in the second quarter. And I think if there is a silver lining, it’s that those will go back up to trend in the third quarter and contribute to growth. So, in a sense, this is sort of 2 percent “light.”

Smith: How about earnings season? A lot of companies are posting earnings. Quickly, what’s your takeaway from earnings season?

Low: Look, most of them actually did a little better than expected in terms of earnings. But about four out of five missed in terms of sales. And that’s the one thing where I do worry about the second half of the year. They’re pretty much all guiding sales expectations downward.

Smith: Chris Low with FTN Financial. Thank you, Chris.

Low: Thank you.

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