Encouragement in GDP Report


The drop in U.S. gross domestic product growth during the second quarter came as no surprise to most economy and market analysts. Here are reactions to the report.


“The headline may not be strong, but some of the details were a little stronger, especially with respect to consumption and spending.”
— Meg Browne, currency strategist, HSBC Bank USA

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“We did see a pause in the second quarter.” However, “we’re still seeing the underlying strength of the economy — low inflation, high productivity, unemployment rate falling and the continuing in the pickup on jobs.”
— Treasury Secretary John Snow

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The weaker GDP growth rate provides evidence that “George Bush is misleading Americans when he says that the economy has turned a corner.”
— statement from John Kerry’s campaign

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“Maybe we are in fact in a soft spot right now as Greenspan believes. the fact that corporate profits were flat means [corporations] may have to look at ways to increase their productivity.”
— Drew Matus, economist, Lehman Brothers

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“I think the most positive thing about this report was the upward revision in nonresidential capital spending.” The report “underscores that firms have a distinct desire to add machines rather than people in order to get increases in productivity and output.”
— Ken Mayland, president, ClearView Economics

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“The decline in inflation in the third quarter appears to be related to weak consumer spending and more extensive discounting, etc. We are forecasting an acceleration of consumer spending in the fourth quarter.”
— Bruce Kasman, global head of economic research, J.P. Morgan Securities

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“Economic growth was below par — temporarily we think — but the expansion is still continuing.”
— Lynn Reaser, chief economist, Banc of America Capital Management

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“Assuming the leap in the trade deficit reverse in July, [third-quarter] growth should be 3%-plus.”
— Ian Shepherdson, chief economist of High Frequency Economics

Beyond the Headline Number, Encouragement in GDP Report
August 27, 2004 1:31 p.m.

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