Economy Watch: IMF Boss Expects Expanding Growth

By Dees Stribling, Contributing Editor

The global economy ought to strengthen in the second half of 2014, and accelerate even more in 2015, International Monetary Fund Managing Director Christine Lagarde said over the weekend in a speech at Rencontres Economiques d’Aix-en-Provence. She also noted that she doesn’t expect a “brutal” slump in China, predicting 7 percent to 7.5 percent growth for the country this year (slow by Chinese standards, but not catastrophic).

Though economic activity ought to improve in the near future, the inaction of various governments and businesses around the world is a continuing drag on growth, Lagarde argued, with an “investment deficit” in both the public and private sectors dragging down growth in most countries. “Global activity is picking up, but the momentum could be less strong than we had expected because potential growth is weaker and investment… remains subdued,” she said.

The IMF is scheduled to publish its estimates for economic growth worldwide later this month. Lagarde said they would be slightly different from the most recent forecasts, which were published in April. At that time, the IMF predicted that global output would grow by 3.6 percent this year and 3.9 percent in 2015.

Americans spent a little less in June

Americans’ self-reports of daily spending fell back slightly in June, averaging $91 for the month, according to polling specialist Gallup on Monday. That’s down slightly from a six-year high of $98 in May, but is similar to the $90 average in June 2013. The figures are based on interviews throughout June with more than 15,000 Americans, asking them to report the total amount they spent “yesterday” in stores, gas stations, restaurants, or online—not counting home and vehicle purchases, or normal monthly bills—and gives an indication of discretionary spending.

The $91 figure for June suggests a mixed bag for the economy, according to Gallup. While it represents a much higher level of consumer spending than the $60 to $70 daily averages reported for much of 2009 to 2012, it also represents the first decline in the monthly average since January of this year.

While Americans’ self-reported spending in June was generally on par or lower than their spending in May, this month’s $7 drop is one of the largest recorded by Gallup during summer since 2008, when June spending fell by $10. Even so, the June 2008 spending average of $104 is still the highest average for that month in Gallup’s six-year trend.

Wall Street retreated from its pre-July 4 record highs on Monday, with the Dow Jones Industrial Average off 44.05 points, or 0.26 percent (but still above 17,000). The S&P 500 declined 0.39 percent and the Nasdaq lost 0.77 percent.