The economic slowdown that began in the spring months has continued into the summer. We estimate that GDP grew at an annualised rate of around 1.5% in the second quarter, down from 1.9% in the first. And the further falls in the ISM activity indices in June suggest that the economy may even grow at a slower rate in the third quarter. But there are few signs that another recession is looming. So while the chances of more policy stimulus from the Fed have increased, a third round of quantitative easing (QE3) is not a done deal.
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