Economy at a Glance :: Federal Reserve Bank of Cleveland

Economy at a Glance

Executive Summary

The latest batch of data suggests economic activity has slowed down substantially this year. The Bureau of Economic Analysis’s advance estimate for real GDP growth in the second quarter was a modest 1.3 percent annualized rate. With personal consumption expenditures all but flat, the main …  Executive Summary
The latest batch of data suggests economic activity has slowed down substantially this year. The Bureau of Economic Analysis’s advance estimate for real GDP growth in the second quarter was a modest 1.3 percent annualized rate. With personal consumption expenditures all but flat, the main growth drivers were private nonresidential investment and exports, which benefited from a weaker dollar. As if this was not enough bad news, the first quarter’s real GDP growth rate was revised down to 0.4 percent, meaning that through the first half of the year, the economy grew at a 0.8 percent annualized rate.

Nonfarm payrolls increased 117,000 in July, with an increase of 154,000 in private payrolls. While this was substantially higher than in the previous two months, it is still well below the level needed to keep up with population growth, let alone with the level required for a sustained expansion. As a result, the employment-to-population ratio decreased slightly to 58.1 percent. Despite this, the unemployment rate also decreased one tenth of a percent to 9.1 percent, as the fall in the number of people in the labor force was less than proportional compared to the decrease in the number of unemployed people.

As oil and energy prices retreated, core measures of prices increased more than their respective headlines. The Consumer Price Index (CPI) decreased 0.2 percent in June, bringing the unadjusted CPI rate of inflation to 3.6 percent for the 12-month period ending in June. Its less volatile core counterpart (which excludes food and energy prices) stood at 1.6 percent. The price index for Personal Consumption Expenditures (PCE) decreased 0.2 percent in June, bringing its 12-month percentage change to 2.6 percent. The corresponding core measure increased 0.1 percent in June, while its 12-month change remained at 1.3 percent In its August meeting, the Federal Open Market Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent.  [2011-08-10]  Executive Summary

Monetary Policy   

Labor Markets, Unemployment, and Wages   

International Markets and Foreign Exchange