Gross Domestic Product,
Michigan Sentiment and Investors Sentiment
By Peter S. Iuvara
The U.S. economy turned in its weakest performance over the
last eight years during the 2Q 2001 as businesses cut down
on investment spending and continued to decrease excess inventories.
Commerce Department said gross domestic product, the broadest
measure of the nation's economic health, increased at an annual
rate of 0.7% in the second quarter of this year. This inflation
adjusted number came in lower then both last quarter's 1.3%
gain, and the first call consensus estimate of 0.9% for the
Thus far, as of 11:11 AM EST, the GDP announcement has minimally
effect the markets. The Dow is down 44.63 to 10411.00, and
the Nasdaq is down just 0.38 to 2022.58. Investors seem to
be shrugging off these numbers, largely because no one really
expected a strong performance just yet, and some even predicted
a negative number.
University of Michigan's official July consumer sentiment
index dropped slightly to 92.4 from 92.6 in June. Economists
had forecast the final index to read 93.6. This number however
is well above the low of 90.6 set back in February.
This number is sometimes broken down into two parts; how
consumers feel about the economy right now, and what their
expectations are for the future.
The "current condition" index, fell to 98.6 from
last month's reading of 101.6. On the other hand, the expectation
component of the index rose to 88.4 from 86.9 in June.
Overall, this report looks to be optimistic. Although current
market conditions may remain challenging over the near term,
the US consumer expects the intermediate and long-term outlook
to be much better than we have seen.