Advocacy Investing® Portfolio Strategies, Issue 39

THE RAIN IN SPAIN…

• Sharp loss of momentum…

• ..but, a positive surprise on the July payrolls may indicate some bounce

• The eurozone financial crisis continues to be the major downside risk…

• … but deep policy divisions prevent a quick solution to the problem

• No clear trend in the economy, expected to continue to perform below potential

• The Fed and the European central Bank (ECB) stand ready to act

• The markets holding at high levels despite the onslaught of bad news

Economic growth slowdown: The Bureau of Economic Analysis (BEA, US Department of Commerce) released its first estimate of 2Q12 growth. The economy grew at an anemic 1.5% annualized rate, its slowest pace since 3Q11. The growth number for 1Q12 was revised upwards from 1.9% to 2.0%. A faltering consumer was the main reason for the slowdown in growth, while government continued to be a drag. The BEA also revised past GDP numbers all the way back to 1Q09. The revisions indicate that the 2008-09 recession was not as severe as earlier reported (GDP fell by 4.7% between Dec 2007 and June 2009, not 5.1% as estimated earlier), but also that the recovery was slower (GDP rose by only 2.4% in 2010, down from a reported 3%).

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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