Friday, September 01, 2006

Blog of the Week: The Fly on the Wall Blog


Through TheFLY's Eyes: Money Matters


Editor’s note: In our new “Money Matters” column, look for incisive commentary on this blog featuring a summary and analysis of the week’s most important issues affecting money, markets, and investing. It’s no-nonsense analysis timed to arrive when you have the time to read.

The U.S. Economy At Mid-2006

Four years into the current global expansion, it is not a stretch to state that the United States and global economy is entering a critical period. It’s appropriate, then, to review the economic health of both at this juncture, in mid-2006.

The U.S.’s $13.2 trillion economy continues to grow at a healthy rate in 2006, after registering a solid 3.5% GDP growth rate in 2005. In Q2 2006, the most recent quarter, the economy grew at a 2.5% rate after registering a red-hot 5.6% rate in Q1 2006.

The Fed’s Controlled Slow-Down

The deceleration in GDP growth in Q2 2006 primarily reflects a deceleration in orders for durable goods, equipment & software, private inventory investment, nonresidential structures, exports, and state & local government spending, partially offset by a deceleration in imports, services, and private inventory investment.

The deceleration also reflects the intentions of the U.S. Federal Reserve.

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