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Kevin Cummins, UBS U.S. economist, on slowing economic growth and if this will prompt the Fed to enact more quantitative easing.
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Sales I've looked growth pulled back further in the second quarter slowing to one and a half percent but this the economy weak enough to justify another round of monetary easing -- -- big question right now let's option -- comments.
US economist at UBS to -- asked the question nothing has weakened up right now for the Fed to take any more action.
I seriously I -- Thanks for having me.
-- well right now this morning's report.
-- any kind of signaled.
-- confirmed what we already knew that growth in the second quarter has hit us that of the soft patch here we slipped under 2%.
Real GDP was reported up only one and a half percent.
So it's more of the same a disappointing recovery.
It seems like we're stuck in kind of -- -- here here and your question about the Fed whether or not they come in.
This morning's report doesn't suggest that we're gonna see action at next cell phone C meeting on Wednesday.
But it still -- the question whether or not the Fed will will will see the need I look at a later meeting perhaps.
They're fed meets again in September.
Right Kevin -- believe these numbers.
They revised up the revised down -- -- start to get the feel that there revise any way they kind of want them to come out because.
That does not gonna go on anymore.
Right well each year and in July the BEA who compiles -- GDP report.
-- an annual benchmark revision for the previous three years and if you remember last year on July 20 ninth in the year before.
In July.
The level of GDP was revised down quite significantly so the recovery that we had reported today.
Looked a lot different after the report today's report really been changed.
That much of history.
The level of GDP is not all that different than it was an end and quarter -- quarter you had some different movements.
But and when in reality the level of GDP is not much different.
Then what their earlier estimated today.
I guess Kevin -- how much of an impact believe we've got to get through the end of the year we're gonna get through the presidential election get this fiscal cliff sorted out.
And I'm sure will go right down to the very last minute but once we get those issues behind us.
Do you see a lot of room for growth and a nice nice increase in the pace of the recovery.
Yeah I think it on that the key thing in the near term and that is the fiscal cliff obviously that is a big downside risk potentially to the US economy.
The other big risk is Europe.
The fiscal cliff is likely have more of a near term risk.
Europe is likely to be dragged out well -- to 2013.
We really haven't seen all that much of a drag directly from Europe this morning in GDP exports still managed to increase at about a 5% annualized rate.
Although it judging by some survey evidence.
The IS and export orders index does suggest that exports.
Growth of 5% unlikely to be sustained going forward yes and I'll probably be a bit of more of a drag.
Over the coming quarters.
That the fiscal cliff certainly seems to be hitting.
At least hiring decisions we've seen -- slowing hiring.
Consumer spending -- to be telling off here so those two risks are at least in the near term and I hope.
You know that there is a -- analyze probably at the at the end of the year that yet we can put all us.
Passed yet you and everybody else you know -- one of the things that worries me the most is that personal income and consumption growth are directly tied to GDP.
It GDP is not growing personal income consumption growth that's not growing so there's no.
There's no other way to get this economy going again until you get people back out there willing to spend their money.
Yeah you see a change -- that any time soon.
You know unfortunately for the remainder this year -- probably not anything all that much of an improvement going forward.
In 2013.
Though we do love GDP.
Going out -- two point 6% pace so last year for instance GDP was a little bit below 2% so we do have growth.
You know starting to pick up a bit and not 2013.
As fiscal cliff.
-- is behind us by that point.
Right Kevin Cummins US economist UBS Kevin thank you so much appreciated -- equipment and -- -- -- over these.
Good night and -- little not into that good ever ever.
