U.S. Economic Outlook – Quarterly developments

Highlights

 In the first quarter of 2017, the U.S. economy grew at an annualized rate of 1.4%. Fixed investment was the main driver of growth, while inventories were a large drag. Consumer spending slowed significantly from its pace in previous quarters, but still accounted for about half of GDP growth in the first quarter. U.S. employers added a seasonally adjusted 1,079,000 jobs during the first six months of 2017, the weakest first-half performance since 2010, according to data the Labor Department, although this was only 2,000 fewer jobs than in the first half of last year.

 Productivity was flat in the first three months of the year. Slumping productivity gains have led to disappointing real GDP growth this expansion.

 Unit labor costs rose 2.2%. Hourly compensation, encompassing everything from salaries to retirement benefits and health care costs, also rose at a 2.2% annual rate in the first quarter.

 Over the last 12 months, the all items Consumer Price Index rose 1.9% before seasonal adjustment. The core CPI was up 1.7% on the year. Core inflation appears to have moderated, as year-over-year growth was weaker than the 2.2% gain in May 2016.

 Regarding the external sector, the current account deficit, the broadest measure of U.S. trade with the rest of the world, widened to US$ 116.8 billion in the first quarter of 2017, an increase of US$ 2.8 billion. In May, the U.S. trade deficit narrowed 2.3% to a seasonally adjusted US$ 46.51 billion, as exports rose to their highest level in more than two years.

 The Federal Open Market Committee (FOMC) raised interest rates by a quarter point two times in the first half of 2017: in March and in June. Minutes of the June meeting suggest that the Fed’s plans for the second half of the year are less clear.

Fuente: CEPAL

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