How much improvement actually filters through to the actual GDP numbers, however, may be a key factor in dollar action throughout this year. Currency traders will be well advised to monitor monthly data releases. A “wildcard” that may be critical for improving conditions is the business investment sector, Basile says.
“How strong the economy will perform may depend on whether companies invest at an increasing rate,” he says.
Basile adds the low point for business investment came during the fourth quarter of 2006, when it declined 3.1 percent.
“We’ve seen a modest reversal in the first quarter,” Basile says. “It is the most important thing to watch in order to gauge the speed of the U.S. economy. It will tell you whether job growth can be sustained.”
Business investment grew 2.9 percent in the first quarter and Credit Suisse forecasts a 6.3-percent reading in the second quarter.
“That is where to watch for upside surprises,” Basile adds. “Business investment is a very cyclical part of the economy and carries weight in telling you how fast the economy will grow.”
Subscribe to:
Post Comments (Atom)
Post a Comment