@ Wall Street
Until recently, manufacturing had been the economy?s star performer. But in the second quarter, manufacturing output edged up at a 0.2% annual rate, down from a 7.2% pace in the first quarter. And the slowdown was not confined to autos. Core manufacturing output, which excludes high tech and autos, slowed sharply in both May and June, increasing only 0.1%.
The slowdown in manufacturing is one reason the economic outlook has dimmed. Others include the failure of housing to pick up in the first half, May and June?s miserable payroll numbers, and almost no second-quarter growth in real consumer spending. Based on the latest data, we now project that GDP grew only 1.6% in the second quarter?down from 1.9% growth in the first.
The economy will get a lift in the third quarter from a pickup in auto production. But even with this lift, it is now hard to see third-quarter growth exceeding 3%. And the ongoing game of chicken over the debt limit could make matters worse?a lot worse.
The two key releases coming out in the upcoming week are housing related. We are expecting better housing starts and existing home sales numbers in June than in May. The numbers will still show housing stuck on the mat.
@ The White House
On Saturday, the President will meet with His Holiness the Dalai Lama at the White House. The President last met the Dalai Lama in February 2010. This meeting underscores the President?s strong support for the preservation of Tibet?s unique religious, cultural and linguistic identity and the protection of human rights for Tibetans.
The President will highlight his enduring support for dialogue between the Dalai Lama?s representatives and the Chinese government to resolve differences. On Sunday, the President has no public events scheduled.