Outlook and Market Review - Second Quarter 2014

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GDP growth rebounded in the second quarter of 2014 from a contraction of 2.1% in the first quarter. According to the Bureau of Economic Analysis advanced report, the economy grew 4% in the second quarter. When revised, the growth rate is likely to be closer to 3.5% due to inflated inventory. For the first half of the year the annualized GDP growth rate was less than 1%. The U.S. economy is expected to grow at a 3% annual rate for the rest of 2014, according to a WSJ journal survey of 43 economists. Quarterly GDP growth has been on a roller coaster for the past few years. We have yet to see a trend of strong growth to support a view that the economy is emerging from sub-par growth. Since the Great Recession the average annual growth rate has been about 2.4%, well below the trend line growth. Even if expectations of a 3% growth rate materialize for the remainder of the year, the growth rate for all of 2014 will only be about 2%.