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Q1 2015 Economic Update

3

US Economy

2014 started with a 1.9% drop in the first quarter GDP, increased 4.6% (revised) in the second quarter, and further gained 5.0% (revised) in the third quarter. This 5.0% gain was the best quarter since 2003 (Reuters) and the fourth quarter of 2014 is expected to be strong as well. Consumer sentiment has steadily increased along with business and consumer spending; the economy is finally in a healthy recovery mode. Low inflation (helped by lower inflation in Europe and a drop in commodity prices) allowed interest rates to drop back to 2% levels on the 10-year Treasury Bond. We have now moved from a fragile economy which was threatened by rising inflation to a healthy economy likely to enjoy relatively low inflation over a couple more years. The financial markets responded with the average US stock fund rising 7.6% and most other asset classes gaining 1-5% (WSJ).

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