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Saturday, September 10, 2011

Wells Fargos Monthly Economic Outlook - September, 2011

- Our outlook calls for moderate, subpar GDP growth of 1.5 percent during the second half of this year, reflecting modest gains in consumer spending, equipment and software spending, and improvements in residential and commercial remodeling.

- Headline CPI is expected to rise to 3.5 percent in the second half of 2011 and will likely limit growth in consumer spending, as real disposable income is expected to rise just one percent during that time.

- The Federal Reserve’s core personal consumption deflator will approach two percent by the end of the year, and while we believe the Fed will likely pursue modest policies to supply liquidity, we do not expect a third round of quantitative easing.

- Structural unemployment remains a key issue, as skills and job location continue to be significant barriers to filling new positions.

- Corporate profit growth is expected to moderate in the year ahead, reflecting the competitiveness of U.S. firms in a global environment, especially in value-added manufacturing, energy, and consumer products.

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