So far there is little evidence that the recent softening in economic growth is developing into a more significant slowdown. The leading index and a weighted average of the two ISM activity indices are both consistent with annualised GDP growth of close to 2% in the second quarter. Of course, the euro-zone crisis is a growing threat to the US outlook. But the US economy is not that exposed to Europe and the domestic recovery appears to have deepened. Banks have reported that demand for loans has risen to a 14-year high and sustainable recoveries finally appear to be underway in the autos and housing sectors.
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