Q2 May Be OK, but Challenges Remain

At least that's the assessment of Federal Reserve Bank of San Francisco economist John Fernald (hat tip: Mark Thoma).

We've commented before that housing futures signal further price declines.

 

Source: Fedviews

 

We also know that the auto sector has been hit hard.

 

Source: Fedviews

 

Notwithstanding, the tax stimulus likely kept consumption spending growing this quarter, and Fernald is expecting a reasonably good number for 2008:Q2 real GDP growth.

 

Source: Fedviews

 

But Fernald anticipates a return to anemic growth rates for 2008:H2.

Comments

[investor88:]

James has made some insightful observations, appreciate the data. Housing and vehicles trends are rather weak ["house prices continue plunging", "vehicles sales are plummeting"], 2h2008 gdp is weaker than 1h2008 although outlook for 2009 is stronger. On balance the outlook is one of weakness so this is no time for traders on the long side to be fooling around, stop loss protection may be appropriate. Those so inclined may even bet on the short side although I would also put in a stop loss as a matter of risk control discipline whether trading long or short. Long term holders Warren Buffet style may see lower share prices as opportunities to further accumulate selected stocks but that is another subject.

2008 Jul 27 06:00 AM