Robert Hughes

The broad gains in the July Employment Report from the Labor Department this morning suggests the economy continues to grow at a moderate pace. We continue to expect the economy to post faster growth in the second half of 2015 following the weak first quarter.

Data released today by the U.S. Department of Commerce show second quarter real Gross Domestic Product grew 2.3 percent following an upwardly revised first quarter gain of 0.6 percent. Along with today’s first estimate of second quarter GDP, Commerce also released revised estimates of GDP for the past three years. 

The Wall Street Journal recently ran an interesting article on “The Smartest Way to Take a Vacation,” which is especially relevant this summer, as we see Americans increasingly opening their wallets for a warm-weather getaway.

June’s Employment Situation report from the Bureau of Labor Statistics (BLS) showed 432,000 Americans dropped out of the labor force, the third-largest decline in four and a half years. That drop pushed the participation rate, the percentage of the working-age population either employed or looking for a job, to 62.6 percent, the lowest since 1977.

The economy is improving after a weak first quarter. We have a time-tested model to help predict recessions, and this month it tells an encouraging story.

The strength in the May Employment Report released this morning suggests the economy is rebounding from a confluence of negative forces including the rising dollar that hurts exporters, the plunge in crude oil prices that has hurt the energy industry, disruptions from the west coast port labor issues, and lingering effects from harsh winter weather that dragged down first quarter growth.

Our April Business Conditions Monthly report began the discussion of federal income taxes and equity. It reported IRS data showing that the top 20 percent of income tax filers paid 88 percent of income taxes in 2011.

In February we analyzed the impact of the stronger dollar on the various sectors of the U.S. economy, as part of our new report, Business Conditions Monthly.

In it we noted, “The surging dollar may be a boon for consumers who reap the benefits of potentially cheaper imports, but it can be a burden for U.S. corporations.” This has proven to be true as the ensuing months unfolded.

The Bureau of Economic Analysis this morning released a disappointing first estimate for the 2014 fourth-quarter real gross domestic product – the total value of this country’s finished goods and services. At 2.6 percent, it was roughly half of the 5.0 percent pace of growth in the third quarter. And it was about half a point below the consensus of analysts’ expectations.

But despite the disappointing headlines, there were a couple of positive points within the details.

Look for the Federal Reserve to be even more patient with raising interest rates amid this morning’s data showing that consumer prices were still quite tame.