Although GDP growth of 2.3% is still below the average GDP growth rate since 1947 of 3.2%, some analysts are saying that a gradual raising of rates by The Federal Reserve is “reasonable.”
(Bloomberg) — The world’s largest economy expanded at a faster pace in the second quarter and managed to eke out a gain at the start of the year, painting a picture on incremental progress consistent with the Federal Reserve’s view.
Gross domestic product rose at a 2.3 percent annualized rate, and a revised 0.6 percent advance in the first quarter wiped out a previously reported contraction, Commerce Department data showed Thursday in Washington. The median forecast of 80 economists surveyed by Bloomberg called for a 2.5 percent gain. Consumer spending grew more than projected.
The economy has moved beyond some of the early 2015 constraints including weather and port delays, while cooling global markets, a strong dollar and insufficient wage gains may continue to limit growth. Fed officials, considering when to begin raising rates this year, concluded on Wednesday that the U.S. is making progress.
“We have plodding, modest yet durable growth,” Michael Gapen, the New York-based chief U.S. economist for Barclays Plc., said before the report. “A gradual raising of rates is reasonable” for the Fed.
Average wage growth (2%) still remains below GDP growth rate (2.3%).
According to the Atlanta Fed GDP NOW report, the spike in GDP in June was … residential investment.
The GDP report was lower than the expected 2.5%. Hence, the 30 year Treasury bond yield slipped below 3%.
Bubble-up! Fed policy is working (at least for creating massive asset bubbles, not for wage growth).