29 Apr 2015
US Q1 GDP disappoints, but Q2 growth expected to rebound – ING
FXStreet (Barcelona) - Rob Carnell, Chief International Economist at ING, reviews the US GDP data release and further notes that the drag from components in Q2 will be much smaller, and a growth of above 3% might be expected in the mentioned period.
Key Quotes
“The first release of 1Q15 US GDP was a fair bit lower than expected at 0.2%QoQ annualized, but on initial reflection, this is not so much news, as confirmation of what we already knew about the first quarter. And to be honest, it could have been worse, at least it had a plus sign – just.”
“We had anticipated that the biggest surprises would be connected to the ports-strike-affected net export series, and the consequent effects this would have on inventories. Net exports did drag on growth to the tune of 1.25pp, but with exports struggling to leave factories, this resulted in inventories rising, and reducing this drag by an offsetting 0.74pp – the net effect of the two series on overall GDP therefore registering barely half a percentage point.”
“Perhaps more surprising, though maybe not with the benefit of hindsight, investment in structures (includes shale oil drilling / fracking) fell by 23.1%, which dragged the total down by 0.75pp. And this, accounted for most of the difference between the consensus expectation of 1.0% (ING f 0.8%) and the actual result.”
“Consumer spending was if anything a little better than anticipated at 1.9%, though only by 0.1% or so. Business investment was basically flat from the previous quarter, also in line with expectations, and there was an unhelpful drag from state and local government spending.”
“Looking forward to 2Q15, the drag from structures is likely to be smaller, if still probably negative. But we might well expect a positive bounce from the combination of net exports and inventories, perhaps adding half a percent back. Some stronger business investment and consumer spending will also help.”
“So rather than a figure close to zero, we might reasonably look for something quite a bit stronger than 3% in 2Q15.”
Key Quotes
“The first release of 1Q15 US GDP was a fair bit lower than expected at 0.2%QoQ annualized, but on initial reflection, this is not so much news, as confirmation of what we already knew about the first quarter. And to be honest, it could have been worse, at least it had a plus sign – just.”
“We had anticipated that the biggest surprises would be connected to the ports-strike-affected net export series, and the consequent effects this would have on inventories. Net exports did drag on growth to the tune of 1.25pp, but with exports struggling to leave factories, this resulted in inventories rising, and reducing this drag by an offsetting 0.74pp – the net effect of the two series on overall GDP therefore registering barely half a percentage point.”
“Perhaps more surprising, though maybe not with the benefit of hindsight, investment in structures (includes shale oil drilling / fracking) fell by 23.1%, which dragged the total down by 0.75pp. And this, accounted for most of the difference between the consensus expectation of 1.0% (ING f 0.8%) and the actual result.”
“Consumer spending was if anything a little better than anticipated at 1.9%, though only by 0.1% or so. Business investment was basically flat from the previous quarter, also in line with expectations, and there was an unhelpful drag from state and local government spending.”
“Looking forward to 2Q15, the drag from structures is likely to be smaller, if still probably negative. But we might well expect a positive bounce from the combination of net exports and inventories, perhaps adding half a percent back. Some stronger business investment and consumer spending will also help.”
“So rather than a figure close to zero, we might reasonably look for something quite a bit stronger than 3% in 2Q15.”