Economic Outlook for July 2012

The three components of a healthy economy are full employment, stable prices, and economic growth. We track three economic indicators monthly to gage the health of the economy, more specifically to gage whether the economy is getting better or worse:

  • Unemployment numbers to track employment
  • The Consumer Price Index (cpi) to track prices/inflation
  • Manufacturing Output to track economic growth

Unemployment Statistics

The unemployment rate is stubbornly holding steady at 8.2% despite continued massive fiscal and monetary stimulus. As a result we expect accomodative fiscal and monetary to continue in the near term. The next reporting date is August 3, 2012.


Despite massive fiscal and monetary stimulus, consumer prices have been rising at a very modest rate. Inflation is a major concern to policy makers. Until signs of inflation begin to emerge, expect the stimulus to continue. The next reporting date is August 15, 2012.


Manufacturing output has surprisingly rebounded quite strongly in the last two years. First quarter 2012 revised output was up 10% from the prior year. Based on the data, it appears the massive fiscal and monetary stimulus are having the desired effect of improving output and employment without triggering inflation. That being said, the magnitude of the improvement leaves much to be desired, especially in the area of employment. For now we would expect the Federal Reserve to continue to hold rates down, at least in the near term, not wanting to derail the fragile recovery. We will continue to monitor these economic indicators closely. Second quarter preliminary numbers will be released August 6, 2012.

This entry was posted in Economic Outlook Updates. Bookmark the permalink.