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 INTRODUCTION
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Although the U.S. Economy has now shown positive growth in eight consecutive quarters, that growth has been slow, and there are signs that it is slowing further. During its June meeting, the Federal Open Market Committee (“FOMC”) said that the pace of the economic recovery had “slowed in recent months and that conditions in the labor market had softened,” contrary to expectations during its previous meeting.[1]FOMC members cited the following as contributors to the failure of the economic recovery to progress at the previously projected pace:
- Financial retrenchment at every level of government,
- A persistently weak housing market,
- The continued efforts by many American households to substantially reduce existing debt obligations,
- A recent lull in the growth rates of personal incomes and personal consumption, and
- The unwillingness of private firms to hire and invest in an uncertain economic environment.
FOMC members also expressed disappointment with the unemployment rate. The rate of unemployment increased in the second quarter of 2011; earlier projections anticipated that it would contract in response to expected economic growth. Given that the FOMC’s primary constitutional mandate is to “foster maximum employment and price stability,” participants were concerned about the elevated unemployment rate at the end of the first half of 2011 and the future impact that persistent high unemployment might have on the economy.
Meeting participants generally noted that the most recent data on employment had been disappointing, and new claims for unemployment insurance remained elevated. The recent deterioration in labor market conditions was a particular concern for FOMC participants because the prospects for job growth were seen as an important source of uncertainty in the economic outlook, particularly in the outlook for consumer spending.[2]
At its June meeting, the FOMC agreed to complete its $600 billion purchase of Treasury securities and opted to make no changes to the existing federal funds rate, explaining:
The information received over the intermeeting period indicated that the economic recovery was continuing at a moderate pace, though somewhat more slowly than the Committee had expected, and that the labor market was weaker than anticipated. Inflation had increased in recent months as a result of higher prices for some commodities, as well as supply chain disruptions related to the tragic events in Japan. Nonetheless, members saw the pace of the economic expansion as picking up over the coming quarters and the unemployment rate resuming its gradual decline toward levels consistent with the Committee’s dual mandate.[3]
Despite numerous indications that point to a slowing economic recovery, the FOMC projects that economic expansion will begin accelerating over the approaching quarters and “unemployment will gradually decline toward levels consistent with the Committee’s dual mandate [of full employment and no inflation].”[4]
Gross Domestic Product
The most commonly cited measure of general economic conditions is growth in real GDP. Real GDP is the real (adjusted for inflation) dollar value of all goods and services produced within the country in a given period. The Bureau of Economic Analysis (“BEA”) quarterly measure of real GDP is seasonally adjusted at annual rates (SAAR), which means that the figure has been annualized with seasonal effects removed.
Real GDP increased 1.3% (SAAR) in the second quarter of 2011 from $13,227.90 billion to $13,270.10 billion after increases of 2.5%, 2.3%, and 0.4% during the third and fourth quarters of 2010 and the first quarter of 2011, respectively. Real GDP increased 3.0% in 2010, after changes of 1.9%, -0.3%, and -3.5% in 2007, 2008, and 2009 respectively.[5]
The increase in real GDP in the second quarter primarily reflected positive contributions from exports, nonresidential fixed investment, private inventory investment, and federal government spending that were partly offset by a negative contribution from state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased.
The acceleration in real GDP in the second quarter primarily reflected a deceleration in imports, an upturn in federal government spending, and an acceleration in nonresidential fixed investment that were partly offset by a sharp deceleration in personal consumption expenditures.[6]
In June 2011, the FOMC predicted that real GDP growth would have a central tendency between 2.7% and 2.9%, between 3.3% and 3.7%, and between 3.5% and 4.2% during 2011, 2012, and 2013, respectively. In its longer-run projection,[7]the FOMC predicted that real GDP growth would have a central tendency between 2.5% and 2.8% (consistent with its previous longer-run projection).[8]
The second quarter Philadelphia Federal Reserve Survey of Professional Forecasters (the “Philly Survey”) predicts real GDP growth of 3.4%, 3.5%, 2.9%, and 2.5% (SAAR) for the third and fourth quarters of 2011 and the first and second quarters of 2012, respectively. The Philly Survey further predicts annual GDP growth of 2.7%, 3.0%, 2.8%, and 3.3% during 2011, 2012, 2013, and 2014, respectively.[9]
The July Wall Street Journal Survey of Economic Forecasters (the “WSJ Survey”) estimates that real GDP grew at an annualized rate of approximately 1.9% in the second quarter of 2011. In addition, the WSJ Survey predicts growth rates of 3.1%, 3.1%, 2.8%, and 2.9% (SAAR), for the third and fourth quarters of 2011 and the first and second quarters of 2012, respectively. The WSJ Survey projects GDP will experience annual growth rates of 2.6% and 3.0% in 2011 and 2012, respectively.[10]
According to a WSJ MarketWatch article regarding the release of the 2011 second quarter GDP results, the government’s report (which includes revisions to the past three years of data) raises concerns about the expected acceleration of economic activity to take place in the second half of 2011. The revisions to the prior data imply that the recession was deeper than initially reported and that subsequent growth has been lower than initially reported.
The new data on the inflation- and seasonally-adjusted value of all goods and services produced in the United States showed the economy barely grew at all in the January-to-March quarter, rising just 0.4% from the initially reported 1.9% improvement. At the same time, the government said the recession proved to be deeper than initially projected.[11]
Given the continuing debate over the raising of the debt ceiling, some economists believe the latest GDP release might act to suppress the willingness of Congress to begin reducing government spending. According to Mr. Mark Vitner, senior economist at Wells Fargo, the GDP report is a “game changer.”
It does raise some legitimate questions concerning how quickly we can rein in government spending without doing more harm than good.[12]
 [13]
Prices and Inflation
Inflation is the increase in the general price level of goods and services in an economy. The Consumer Price Index (CPI) is the most commonly cited measure of inflation. The CPI measures the price of a standard market basket of goods designed to be representative of the items purchased by a typical urban consumer.
The CPI increased at an annualized rate of approximately 0.4% during the second quarter of 2011, from 223.5 in the first quarter of 2011 to 224.3 (1982-1984=100, seasonally adjusted). The second quarter increase came after growth rates of 0.7%, 0.8%, and 1.5% for the third and fourth quarters of 2010 and the first quarter of 2011, respectively. Additionally, the CPI increased approximately 3.4% in the last twelve months (from June 2010 to June 2011), compared to annual growth rates in the CPI (not seasonally adjusted, “NSA”) of 2.8%, 3.8%,-0.4%, and 1.6% during 2007, 2008, 2009, and 2010, respectively.[14]
The Philly Survey anticipates annualized growth in the CPI of 2.2%, 2.0%, 2.3%, and 2.1% (SAAR) for the third and fourth quarters of 2011 and the first and second quarters of 2012, respectively. Furthermore, the Philly Survey predicts annual (quarter four over quarter four) CPI growth of 3.1%, 2.2%, and 2.3% for 2011, 2012, and 2013, respectively.[15]
The WSJ Survey predicts the CPI will grow 3.1%, 2.3%, and 2.4% for the last twelve months ended December 2011 and June and December 2012, respectively.[16]
Economists at Bank of America/Merrill Lynch (“BAC economists”) expect the CPI to increase 3.2%, 1.6%, 1.7% and 1.8% (SAAR) during the third and fourth quarters of 2011 and first and second quarters of 2012, respectively. In addition, BAC economists project annual CPI growth rates of 3.2% and 2.1% for 2011 and 2012, respectively.[17]
The CPI for food increased from 225.2 in the first quarter of 2011 to 227.5 in the second quarter of 2011 (1982–1984=100), a 1.0% increase. The second quarter increase followed changes of 0.4% for both the third and fourth quarters of 2010 and 1.8% for the first quarter of 2011.The CPI for food increased 3.7% in the last twelve months (from June 2010 to June 2011). In comparison, the CPI for food (NSA) had annual growth rates of 4.0%, 5.5%, 1.8%, and 0.8% during 2007, 2008, 2009, and 2010, respectively.[18]
The CPI for energy decreased 3.3% in the second quarter of 2011 from 245.9 in the first quarter of 2011 to 237.9 (1982–1984=100). The second quarter decrease followed changes of 6.0%, 6.7%, and 9.2% in the third and fourth quarters of 2010 and first quarter of 2011, respectively. The CPI for energy increased approximately 19.6% in the last twelve months (from June 2010 to June 2011). In comparison, the CPI for energy (NSA) experienced annual growth rates of 5.5%, 13.9%, -18.4%, and 9.5% in 2007, 2008, 2009, and 2010, respectively.[19]
 [20]
At its June meeting, the FOMC acknowledged that certain measures of consumer price inflation had risen in 2011 as a result, in part, of increases in the prices of oil and other commodities.
…Participants’ forecasts for total personal consumption expenditures (PCE) inflation in 2011 were little changed from April…Most participants anticipated that the influence of higher commodity prices and supply disruptions from Japan on inflation would be temporary, and that inflation pressures in the future would be subdued as commodity prices stabilized, inflation expectations remained well anchored, and large margins of slack in labor markets kept labor costs in check.[21]
The Producer Price Index (PPI) is another commonly cited measure of inflation. The PPI measures the price of a standard market basket of goods designed to be representative of the items purchased by a typical producer. The PPI for all finished goods increased 0.6% in the second quarter of 2011 from 189.8 in the first quarter of 2011 to 191.0 (1982=100). The second quarter increase followed changes of 1.0%, 1.9%, and 3.3% in the third and fourth quarters of 2010 and first quarter of 2011, respectively. The PPI for all finished goods increased 7.0% in the last twelve months (from June 2010 to June 2011). In comparison, the PPI for all finished goods (NSA) experienced annual changes of 3.9%, 6.3%, -2.6%, and 4.2% during 2007, 2008, 2009, and 2010, respectively.[22]
 [23]
The average price per barrel of oil decreased 6.4% in the second quarter of 2011 from an average of $102.86 in March 2011 to an average of $96.26 in June 2011. The price per barrel of oil increased 27.8% in the last twelve months (from June 2010 to June 2011). In comparison, the average price per barrel of oil had an annual growth rate of 9.5%, 37.8%, -37.8%, and 28.3% in 2007, 2008, 2009, and 2010, respectively.[24]
The WSJ Survey projects the price per barrel of oil will be $95.59 by December 31, 2011 and $97.28 by June 30, 2012.[25]
IBISWorld estimates that the price per barrel of oil will increase 28.4% in 2011, and predicts the price per barrel of oil will experience annual growth rates of 4.9%, -8.8%, and 11.7% in 2012, 2013, and 2014, respectively. Furthermore, IBISWorld predicts that the price per barrel of oil will grow at an average annualized rate of approximately 4.1% in the five years to 2016.[26]
 [27]
Trade Deficit
Real net exports increased (became less negative) from a first quarter total of -$424.4 billion (SAAR) to -$405.7 billion in the second quarter of 2011. The 2011 second quarter level of real net exports was preceded by real net exports of -$458.7 billion, -$414.2 billion and -$424.4 billion in the third and fourth quarters of 2010, respectively. Prior to the end of 2010, real net exports had consistently increased, posting annual totals of -$648.8 billion, -$494.8 billion, and -$358.8 billion in 2007, 2008, and 2009, respectively. However, the prevailing trend reversed in 2010 with real net exports decreasing to -$421.8 billion.[28]
The Philly Survey predicts real net exports will be -$400.1 billion, -$402.3 billion, and -$399.2 billion in the third and fourth quarters of 2011 and the first quarter of 2012, respectively. On an annual basis, the Philly Survey projects real net exports will increase from -$422.5 billion in 2010 to -$399.9 billion in 2011. However, in 2012, the Philly Survey expects real net exports to decrease to -$403.2 billion.[29]
BAC economists project that real net exports will reach -$381.0 billion and -$365.0 billion during 2011 and 2012, respectively.[30]
 [31]
Interest Rates
Interest rates remained stable during the second quarter of 2011. The discount window rate remained constant at 0.75% during the second quarter of 2011, as it had for the majority of 2010. The 0.75% rate is an increase from the rate of interest prevalent throughout 2009 (0.50%), a historically low rate that was the result of a downward trend that began in July 2007 (6.25%).[32]
The federal funds rate decreased 5 basis points in the second quarter of 2011 from 0.14% in first quarter of 2011 to 0.09%. The current rate represents a decrease of 9 basis points in the last twelve months (from June 2010 to June 2011).[33] At its June 2011 meeting, the FOMC maintained its target for the federal funds rate between 0.00% and 0.25%. The Committee’s decision was based largely on the following:
To promote the ongoing economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to keep the target range for the federal funds rate at 0 to ¼ percent. The Committee continues to anticipate that economic conditions – including low rates of resource utilization and a subdued outlook for inflation over the medium run – are likely to warrant exceptionally low levels for the federal funds rate for an extended period. [34]
The yield to maturity on 20-year U.S. Treasury bonds decreased 36 basis points in the second quarter of 2011 from 4.27% in the first quarter of 2011 to 3.91%. The yield decreased 4 basis points during the last twelve months (from June 2010 to June2011).[35]The average yield to maturity on Aaa rated (Moody’s) corporate bonds decreased14 basis points from 5.13% in March 2011 to 4.99% in June 2011. The yield increased 11 basis points during the last twelve months.[36]
 [37]
Financial Markets
The Dow Jones Industrial Average (DJIA) increased 0.8% in the second quarter of 2011 from 12,319.73 on March 31, 2011 to 12,414.34 on June 30, 2011. The second quarter increase followed changes of 10.4%, 7.3%, and 6.4% in the third and fourth quarters of 2010 and the first quarter of 2011, respectively. The DJIA increased 27.0% in the last twelve months (from June 30, 2010 to June 30, 2011). In comparison, the DJIA had annual (December to December) growth rates of 6.4%, -33.8%, 18.8%, and 11.0% during 2007, 2008, 2009, and 2010, respectively. The DJIA peaked on October 11, 2007 at 14,279.96 and then reached a recent low of 6,440.08 on March 9, 2009.[38]
The S&P 500 decreased 0.4% from 1,325.83 on March 31, 2011 to 1,320.64 on March 31,2011. The second quarter decrease in the S&P followed changes of 10.7%, 10.2%, and 5.4% during the third and fourth quarters of 2010 and the first quarter of 2011, respectively. The index increased 28.1% in the last twelve months (from June 30, 2010 to June 30, 2011). Historically, the index had annual changes of 3.5%, -38.5%, 23.5%, and 12.8% in 2007, 2008, 2009, and 2010, respectively. The S&P 500 hit its recent high of 1,576.09 on October 11, 2007, and its recent low of 666.79 on March 6, 2009.[39]
The NASDAQ Composite Index decreased 0.3% from 2,781.07 on March 31, 2011 to 2,773.52 on June 30, 2011. The second quarter decrease followed changes of 12.3%, 12.0%, and 4.8% in the third and fourth quarters of 2010 and the first quarter of 2011, respectively. The index increased 31.5% in the last twelve months (from June 30, 2010 to June 30, 2011). In comparison, the NASDAQ had annual changes of 9.8%, -40.5%, 43.9%, and 16.9% in 2007, 2008, 2009, and 2010, respectively. The NASDAQ reached its recent high of 2,861.51 on October 31, 2007 and its recent low of 1,265.52 on March 9, 2009.[40]
 [41]
Housing, Construction, and Real Estate
Average mortgage rates for 30-year fixed mortgages decreased 33 basis points in the second quarter of 2011, from 4.84% (the average rate for March 2011) to 4.51% (the average rate for June 2011). However, average mortgage rates decreased 23 basis points during the last twelve months (from June 2010 to June 2011).[42]According to IBISWorld, the average annual 30-year conventional mortgage rates during 2009 and 2010 were approximately 5.04% and 4.69%, respectively. In addition, IBISWorld projects average annual 30-year mortgage rates of 5.23%, 6.16%, 6.56%, 7.09%, 7.32%, and 7.39% during the years 2011 through 2016, respectively.[43]
 [44]
In spite of the low cost of financing, the housing market continued to remain generally depressed during the second quarter of 2011. Housing starts increased 6.1% by the end of the second quarter of 2011, from 593,000 starts (SAAR) in March 2011 to 629,000 starts in June 2011. The second quarter increase followed changes of 10.8%, -11.9%, and 12.7% during the third and fourth quarters of 2010 and the first quarter of 2011, respectively. Annual housing starts increased 16.7% over the last 12 months (from June 2010 to June 2011). In comparison, housing starts experienced annual (NSA) rates of growth of -24.8%, -33.2%, -38.8%, and 5.9% during 2007, 2008, 2009, and 2010, respectively.[45]
The Philly Survey projects total housing starts will reach an annual rate of approximately 620,000, and 660,000 in the third and fourth quarters of 2011, respectively, with an increase to 690,000 starts in the first quarter of 2012. The Philly Survey estimates that in 2010 there were approximately 590 thousand housing starts.Moreover, the Philly Survey predicts annual housing starts will total 610,000 and 770,000 in 2011 and 2012, respectively. Housing starts hit a recent peak of 2.3 million (SAAR) in January 2006.[46]
As of July, the WSJ Survey predicts that annual housing starts will reach 600,000 and 780,000 in 2011 and 2012, respectively.[47] BAC economists predict annual housing starts will reach 595,000 by 2011 and 727,000 by 2012.[48]
Houses sold increased by 2.3% by the end of the second quarter of 2011, from 305,000 (SAAR) houses sold in March 2011 to 312,000 in June 2011. This increase came after changes of 2.9%, 4.7%, and -7.9% during the third and fourth quarters of 2010, and the first quarter of 2011, respectively. The August 2010 rate of 278 thousand houses sold was the lowest in recorded history (with data dating back to January 1959). Houses sold (NSA) decreased 13.9% in 2010, compared to decreases of 26.2%, 37.5%, and 22.7% during 2007, 2008, and 2009, respectively.[49]
Houses for sale decreased 7.9% by the end of the second quarter of 2011, from 178,000 houses for sale in March 2011 to 164,000 in June 2011. The second quarter drop in houses for sale followed decreases of 4.3%, 5.9%, and 6.3% in the third and fourth quarters of 2010 and the first quarter of 2011, respectively. The total number of houses for sale at the conclusion of the second quarter of 2011 (164,000) is the lowest figure in recorded history which dates back to January 1963. Houses for sale (NSA) decreased 19.0% during 2010, following annual changes of -7.6%, -29.0%, and ‑34.1% in 2007, 2008, and 2009, respectively.[50]
Months of supply of houses for sale represents the number of months it would take to sell all of the houses currently for sale at the current sales rate (seasonally adjusted). The months of supply of houses for sale decreased from 7.0 months in March 2011 to 6.3 months in June 2011.[51]The months of supply of houses for sale decreased 11.5% in 2010,[52]compared to annual rates of change of 47.7%, 16.7%, and -30.4% (December to December) for the years 2007 through 2009, respectively.[53]
 [54]
Unemployment
The average unemployment rate increased 0.2 percentage points in the second quarter of 2011, from 8.9% in the first quarter of 2011 to 9.1%. The unemployment rate was unchanged in the third and fourth quarters of 2010 and decreased 0.7 percentage points in the first quarter of 2011. In addition, the average unemployment rate decreased 0.3 percentage points in the last twelve months (from June 2010 to June 2011). The average annual unemployment rate (NSA) had percentage point changes of 0, 1.2, 3.5, and 0.3 in the years 2007 through 2010, respectively.[55]In June 2011, the FOMC announced that the unemployment rate would have central tendencies between 8.6% and 8.9%, between 7.8% and 8.2%, and between 7.0% and 7.5% during 2011, 2012, and 2013, respectively. The FOMC projects the longer-run central tendency for the unemployment rate will be between 5.2% and 6.0%.[56]
The Philly Survey projects unemployment rates will be 8.7%, 8.1%, 7.5%, and 7.0% for the years 2011 through 2014, respectively.[57]
The WSJ Survey predicts the unemployment rate will be 8.8% by December 2011, with the rate declining over the course of the next year to 8.1% by December 2012.[58] BAC economists project the unemployment rate will be 9.1% and 8.8% in 2011 and 2012, respectively.[59]
A Wall Street Journal article published subsequent to the FOMC’s latest report captures the disappointment with which many analysts reacted to the news:
June’s dismal numbers contradict a string of relatively upbeat recent reports on the economy, which had convinced many investors and economists that it was gaining steam.
…the weak jobs report raises the chances that consumers will hold off purchases and that, in turn, will make companies reluctant to hire…The private sector added just 57,000 jobs in June, down from 73,000 a month earlier and the fewest since May of last year…Alongside scant hiring, wages edged lower, and the amount of time private-sector workers clocked on the job each week slipped.[60]
 [61]
Forward Looking Indicators
The Index of Consumer Sentiment (ICS) is a measure of overall consumer expectations and a predictor of consumer spending and economic conditions. A higher ICS indicates that consumers have higher confidence in the economy and are consequently more likely to spend. The ICS was 71.5 (1966=100) in June 2011, a 5.9% increase from the March 2011 ICS of 67.5. The second quarter increase in consumer sentiment, noted above, followed changes of -10.3%, 9.2% and -9.4% in the third and fourth quarters of 2010 and the first quarter of 2011, respectively. In the twelve months ending June 2011, the ICS decreased 5.9%. In comparison, the ICS experienced annual growth rates of -17.7%, -20.4%, 20.6%, and 2.8% in 2007, 2008, 2009, and 2010, respectively.[62]
 [63]
In response to overall consumer sentiment trending lower over the past several months, Richard Curtin, the Survey of Consumers chief economist, offered the following:
The overall trend is more likely to vary between lackluster and zero than lackluster and robust. Resurgent spending is not on the horizon, nor is widespread retrenchment. Importantly, the consumer no longer has the financial wherewithal to power the economy into overdrive. While it has thus far been the inability not the unwillingness of consumers to ramp up their spending, continued economic stagnation may ultimately dampen their spending desires in favor of a more permanent shift toward economic caution and risk aversion.[64]
The Conference Board Leading Economic Index (LEI) is a signalling measure of the business cycle in which cyclical turning points of the LEI have historically taken place “before those in aggregate economic activity.” The LEI is an average of ten “leading” indicators.[65] The LEI increased 1.1% by the end of the second quarter of 2011, from 114.1 in March 2011 to 115.3 (2004=100). The second quarter increase followed increases of 1.0%, 2.2%, and 1.6% during the third and fourth quarters of 2010 and the first quarter of 2011, respectively. The LEI increased 6.0% during the last twelve months (from June 2010 to June 2011).[66]
 [67]
The following excerpt regarding the release of June’s LEI was offered by Ataman Ozyildirim, an economist at The Conference Board:
The U.S. LEI rebounded in May and resumed its upward trend with a majority of the components supporting this gain. The Coincident Economic Index, a monthly measure of current economic conditions, continued to increase slowly but steadily. Overall, despite short-term volatility, the composite indexes still point to expanding economic activity in the coming months.
Ken Goldstein, another economist with The Conference Board, added the following:
Modest economic growth is being buffeted by some strong headwinds, including high gas and food prices and a soft housing market. The economy will likely continue to grow through the summer and fall, however it will be choppy.[68]
Industrial Production
The Total Industrial Production Index (a measure of total output from industrial companies) increased 0.2% in the second quarter of 2011, from 92.78 during the first quarter of 2011 to 92.97 (2007=100, seasonally adjusted). The second quarter increase in Industrial Production followed changes of 1.6%, 0.8% and 1.2% in the third and fourth quarters of 2010 and the first quarter of 2011, respectively. The index increased 3.8% in the last twelve months (from the second quarter of 2010 to the second quarter of 2011). Comparatively, the index had annual growth rates (NSA) of 2.7%, -3.7%, -11.2, and 5.3% in 2007, 2008, 2009, and 2010, respectively.[69]
The Philly Survey predicts the index will increase 4.5%, 4.1%, and 3.6% in the third and fourth quarters of 2011 and the first quarter of 2012, respectively. Furthermore, the Philly Survey projects the index to grow at an annual rate of 5.0% during 2011.[70]
BAC economists predict the index will experience annual changes of 3.9% in both 2011 and 2012.[71]
The capacity utilization rate measures the usage of the total production capacity for 89 detailed U.S. industries (71 in manufacturing, 16 in mining, and 2 in utilities). The capacity utilization rate is calculated by dividing the seasonally-adjusted output index by the capacity index of these industries.[72]
The capacity utilization rate decreased 9 basis points in the second quarter of 2011 (to 76.7%), down from approximately 76.8% in the first quarter of 2011. The second quarter decrease came after basis point increases of 149, 60 and 72 in the third and fourth quarters of 2010 and the first quarter of 2011, respectively. The capacity utilization rate increased 272 basis points in the last twelve months (from June 2010 to June 2011). Historically, the rate had annual basis point changes of 60, -321, -861, and 530 in the years 2007 through 2010, respectively.[73]
BAC economists predict that the capacity utilization rate will grow to 77.3% and 80.1% in 2011 and 2012, respectively.[74]
 [75]
DISCLAIMER STATEMENT:
This Decosimo Advisory Services National Economic Conditions report summarizes general economic conditions as of June 30, 2011. It was prepared as of July 29, 2011. Information was gathered from sources we believed to be reliable using data available as of the date shown in the respective footnote. DAS accepts no responsibility for the accuracy of information provided in this summary. No statement in this report is to be considered advice for any purpose. It is the responsibility of the user of this report to verify the accuracy of the information herein and to relate the information contained herein to the particular application of its use. Tables of Data referenced in footnotes are available on request from Decosimo Advisory Services.
[5] U.S. Department of Commerce Bureau of Economic Analysis. Historical Table 1.1.1. Percent Change from Preceding Period in Real Gross Domestic Product and Historical Table 1.1.6. Real Gross Domestic Product, Chained Dollars. http://www.bea.gov/national/nipaweb/SelectTable.asp?Selected=Y, accessed 7/29/2011. Note: The Department of Commerce Bureau of Economic Analysis revised its GDP data going back three years.
[6] U.S. Department of Commerce Bureau of Economic Analysis. Gross Domestic Product: 2nd Quarter 2011 (Advance Estimate); July 29, 2011. http://www.bea.gov/newsreleases/national/gdp/2011/gdp1q11_adv.htm,accessed 7/29/2011.
[7] According to The Board of Governors of the Federal Reserve System. Minutes of the Federal Open Market Committee: Staff Review of the Economic Situation, June 21-22, 2011. http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm, accessed7/29/2011. Note:
Projections of change in real gross domestic product (GDP) and in inflation are from the fourth quarter of the previous year to the fourth quarter of the year indicated. PCE inflation and core PCE inflation are the percentage rates of change in, respectively, the price index for personal consumption expenditures (PCE) and the price index for PCE excluding food and energy. Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated. Each participant’s projections are based on his or her assessment of appropriate monetary policy. Longer-run projections represent each participant’s assessment of the rate to which each variable would be expected to converge under appropriate monetary policy and in the absence of further shocks to the economy. The April projections were made in conjunction with the meeting of the Federal Open Market Committee on April 26-27, 2011.
1. The central tendency excludes the three highest and three lowest projections for each variable in each year.
2. The range for a variable in a given year consists of all participants’ projections, from lowest to highest, for that variable in that year.
3. Longer-run projections for core PCE inflation are not collected.
Board of Governors of the Federal Reserve System.Minutes of the Federal Open Market Committee: Staff Review of the Economic Situation, June 21-22, 2011. http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm, accessed 7/29/2011.
[9] Survey of Professional Forecasters, Second Quarter 2011. Federal Reserve Bank of Philadelphia. Released May 13, 2011. http://www.philadelphiafed.org/research-and-data/real-time-center/survey-of-professional-forecasters/, accessed 7/29/2011.
[10] The Wall Street Journal. The Wall Street Journal Economic Forecasting Survey – July 2011.http://online.wsj.com/public/page/economic-forecasting.html, accessed7/29/2011.
[13] U.S. Department of Commerce Bureau of Economic Analysis. Historical Table 1.1.1. Percent Change from Preceding Period in Real Gross Domestic Product and Historical Table 1.1.6. Real Gross Domestic Product, Chained Dollars. http://www.bea.gov/national/nipaweb/SelectTable.asp?Selected=Y, accessed 7/29/2011. Asterisk (*) denotes projection from: Board of Governors of the Federal Reserve System. Minutes of the Federal Open Market Committee: Staff Review of the Economic Situation, June 21-22, 2011. http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm, accessed 7/29/2011.
Survey of Professional Forecasters, Second Quarter 2011. Federal Reserve Bank of Philadelphia. Released May 13, 2011. http://www.philadelphiafed.org/research-and-data/real-time-center/survey-of-professional-forecasters/, accessed 7/29/2011.
The Wall Street Journal. The Wall Street Journal Economic Forecasting Survey – July 2011. http://online.wsj.com/public/page/economic-forecasting.html, accessed7/29/2011. See Table NEC-2, available on request from DAS.
[14] U.S. Department of Labor Bureau of Labor Statistics Database. Consumer Price Index – All Urban Consumers. http://www.bls.gov/cpi/#data,accessed 7/29/2011.
[15] Survey of Professional Forecasters, Second Quarter 2011. Federal Reserve Bank of Philadelphia. Released May 13, 2011. http://www.philadelphiafed.org/research-and-data/real-time-center/survey-of-professional-forecasters/, accessed 7/29/2011.
[16] The Wall Street Journal. The Wall Street Journal Economic Forecasting Survey – July 2011.http://online.wsj.com/public/page/economic-forecasting.html, accessed7/29/2011.
[17] Bank of America/Merrill Lynch. US Economic Weekly, 22July 2011. http://corp.bankofamerica.com/publicpdf/products/abf/economic_weekly.pdf, accessed 7/29/2011.
[18] U.S. Department of Labor Bureau of Labor Statistics Database. Consumer Price Index – All Urban Consumers. http://www.bls.gov/cpi/#data,accessed 7/29/2011.
[19] U.S. Department of Labor Bureau of Labor Statistics Database. Consumer Price Index – All Urban Consumers.http://www.bls.gov/cpi/#data, accessed 7/29/2011.
[20] U.S. Department of Labor Bureau of Labor Statistics Database. Consumer Price Index – All Urban Consumers.http://www.bls.gov/cpi/#data, accessed 7/29/2011.See Table NEC-3, available on request from DAS.
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Note: The figures in the graph indicate the unemployment rate or projection thereof for the fourth quarter of the respective year given. See Tables NEC-2 and NEC-7, available on request from DAS.
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