At the margin, last week’s batch of economic data was neither as dramatic nor decisive as the data released during the first week in June. The data included an eclectic mix of data on business inventories, merchandise trade, retail sales and consumer sentiment that provided some insight into the pace and composition of ceconomic growth in Q2 2009. On balance, the data suggested that the U.S. economy was still on track for our base case as outlined in our 2009 Outlook publication. If anything, the data suggested that the decline in real gross domestic product (GDP) in Q2 2009 might be a bit steeper that the consensus now believes (-2.0%), due to another big drawdown in inventories. However, the prolonged weakness in inventory destocking in Q2 helps to set the stage for a positive print on real GDP in Q3. As always, we will continue to monitor the incoming data closely.

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