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• Real GDP reported in Q4 11 its strongest gain since Q2 10, supported by strong inventory accumulation and decent personal consumption growth.
• High-frequency data reveal an upward momentum in personal outlays at the beginning of 2012, supported by gains in employment and income growth. However, the deleveraging process of US households points to a subdued pace of consumption growth around 2.0% throughout 2012. • Although business investment growth will likely rebound again in Q1 12, we expect it to decelerate to 6.5% in 2012 from 8.6% in 2011, as the labor productivity slowdown underscores further deceleration in corporate profit growth.
• Housing conditions are improving, pointing to a continued rebound in residential construction spending and investment, but the recovery process will be rather gradual.