Is the Eurozone as Strong as Confidence Data Suggest?

U.S. Review

Solid Economic Activity Expected in Q3

• The third estimate of real GDP growth advanced at a 1.4 percent rate, a bit faster from the previously-reported 1.1 percent increase. The still-anemic upwardly revised reading is due to a smaller drag in inventories, structures and equipment and an uptick in net exports. Real final sales, which removes the more volatile GDP components, was also revised higher, increasing at a 2.6 percent annual rate.
• Although economic activity in Q2 was lackluster, recently released monthly indicators suggest Q3 real GDP growth will be solid on the back of consumer spending and positive contribution from inventories after five quarters of weakness.

Global Review

Is the Eurozone as Strong as Confidence Data Suggest?

• Confidence indicators in the Eurozone have strengthened recently, but the underlying pace of economic growth remains lackluster. In our view, economic activity likely will continue to expand, albeit at a subdued pace. Pace of Japanese Growth Remains Weak
• Recent indicators point to continued sluggish growth in Japan, which will make it difficult for that country to shake off the mild case of deflation in which it has been mired for more than a decade.

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