Barclays Capital Calls off Double-Dip Recession
Analysts at Barclays Capital believe the latest data on the US economy leans more toward "moderating growth" in the last half of 2010, rather than an outright double-dip. Last week's real gross domestic product (GDP) in the US, which measures the output of goods and services produced by the country's labor force, grew 2.4% in Q210 from last year, according to the US Department of Commerce Bureau of Economic Analysis (BEA). BarCap analysts also pointed to employment numbers from the Department of Labor. According to that report released today, the unemployment rate continues to hold at 9.5%. Reports in Q210 showed no significant growth in personal income or consumer spending. Slower manufacturing and production in the US also showed weakening demand growth with a drop in new orders and climbing inventories. But analysts said that they've adjusted their expectation of growth in the US economy from the 2.5-to-3% range closer to 2% for the rest of the year. "[A]n outright double-dip recession remains unlikely," according to the report. The analysts reasoned that the data is pointing to firming labor markets while July payrolls "showed a respectable gain in private sector job creation and a stable unemployment rate." Additional policy stimulus from the Federal Reserve is not likely, according to the report, as analysts have detected no change in tone in light of the recent data. Fed Chairman Ben Bernanke said the rising wages would spur household spending for the rest of the year, which would offset the rising inventories for manufacturers. "Gangbusters it is not, but nor is it all doom and gloom," according to the report. Write to Jon Prior.