GDP Fails To Shake Markets

By WSJ Staff

Markets are left a bit nonplussed by the slightly weaker-than-expected first reading of 2Q GDP, with stock futures lower, Treasurys  up and the dollar losing a bit of ground.

The Commerce Department said GDP rose by 2.4%, just shy of the 2.5% expected, and the first quarter was revised up to 3.7%, from an originally reported 2.7% increase. But growth estimates all the way back to the start of 2007 were revised lower.

The data showed high unemployment and job jitters are keeping labor costs tightly under wraps. The employment cost index rose  0.5% in the second quarter, compared to a 0.6% increase in the first. Wages and salaries rose 0.4% while employers’ benefit costs increased 0.6%.

Meantime, business spending on equipment and software continued to surge, increasing by 21.9% in the second quarter, compared with a 20.4% rise in the first three months. The figures highlight the contrast in the economy between high company profits and a persistently feeble jobs market keeping consumers at
bay, one that’s definitely playing out in the stock market.

This certainly doesn’t seem like it has the potential to shake markets out of their current focus on a slowing U.S. economy.