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GDP growth on ‘softer side’ for US; jobless claims average falls

July 30, 2015

US gross domestic product rose 2.3% at an annual rate in the second quarter, the US Department of Commerce announced today. That’s up from first-quarter growth of 0.6%, which had been revised upward from a decline of 0.2%. Separately, the four-week moving average of jobless claims announced today fell by 3,750 last week.

“While growth in the second quarter came in on the softer side, combined with the upward revision to the first quarter, this was still a good news report,” TD Economics Senior Economist James Marple wrote in a report on the announcement. “Importantly, growth is improving where it matters in private domestic spending, suggesting that the American economy is shaking off the global trouble surrounding it.”

Marple continued: “There is nothing in here to alter the equation for the Fed whose focus will remain on the job market. As the drag from drilling investment fades and lower gasoline prices start paying dividends in greater consumer spending, economic growth is likely to improve further to above 3.0% through the second half of the year.”

The Conference Board expects the second half will see only 2.5% growth and said the second-quarter report was disappointing.

“While in line with our forecast, this report is somewhat disappointing, partly due to the drop in business investment in equipment,” according to The Conference Board. “The change in inventories was very large again, which will weigh down on GDP growth in the second half of 2015. On the other hand, headwinds from the strong dollar and the drop in oil-related investment will weaken in the second half of 2015, and we expect the ongoing improvement in the labor and housing markets to push the US economy to about 2.5% in the second half of 2015.”

MarketWatch noted the GDP report included a new methodology meant to make the GDP more accurate.

Separately, the US Department of Labor announced the four-week moving average of jobless claims fell by 3,750 in the week ended July 25 to 274,750 on a seasonally adjusted basis.

The four-week moving average smooths the total numbers. Total initial claims for unemployment rose by 12,000 in the week on a seasonally adjusted basis to 267,000.

Reuters reports the number of claims remains near cycle lows.