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Jul 13 2015

The Two-Speed Economy Shifts Gears

In what has become a recurring theme, 2015 began with economists predicting that the U.S. economy would finally take off and achieve 3% GDP growth. In fact, in recent months, expectations for a second-half rebound in GDP growth still abounded, with the weak Q1 reading labeled an outlier. With Fed policy staying accommodative, a recovering consumer was widely expected to propel the economy to “escape velocity.”

Indeed, such expectations were clearly mistaken. The current U.S. growth trajectory already reflects the two-speed economy that ECRI flagged last November as being characterized by a clear downturn in manufacturing growth, but not yet in services. Against this backdrop, ECRI’s latest research takes an in-depth look at whether the service sector is likely to continue supporting growth in coming months.

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