The fourth in a series of posts on the Budget Control Act.
By Loren Adler and Shai Akabas
Chris Hildebrand and Jacob Smith contributed to this post.
Washington’s efforts to spur growth thus far have been insufficient, yet, unfortunately, the prospects for further action seem dim. The markets seem to have taken notice, and have lowered their expectations. Even after rallying at the end of last week, the Dow Jones Industrial Average and the S&P 500 were still down approximately 6 percent since August 1st, erasing all of their gains from 2011; and the yield of 10-year Treasuries was down to 2.29 percent, or an estimated real rate of just 0.06 percent.
A variety of recently released economic indicators suggests slower growth than previously anticipated, and even the possibility of a double-dip recession. U.S. manufacturing languished in July, stubbornly slipping from its June growth rates. Recently, the Bureau of Economic Analysis revealed that Gross Domestic Product (GDP) grew only 1.3 percent in the second quarter, and worse, GDP growth in the previous quarter was revised downward from 1.3 percent to 0.4 percent. Furthermore, personal consumption has stagnated again, growing by only 0.1 percent in the second quarter (compared to 2.1 percent growth for the first quarter).