27 Apr 2016
US: 1Q16 GDP looks like it will be bad – ING
Rob Carnell, Chief International Economist at ING, suggests that the 1Q16 US GDP growth will likely be weaker than even the 1.4% currently recorded for 4Q15, making it the third consecutive quarterly decline.
Key Quotes
“Since 2Q15, when US GDP bounced strongly on a reversal of weather effects to 3.9% (QoQ, seasonally adjusted annualised rate (saar)) from only 0.6% in 1Q15, the numbers have got steadily lower. 3Q15 GDP fell back to 2.0%, not good, but perhaps acceptable after the abnormal bounce-back in 2Q, but then this was followed by only 1.4% in 4Q15.
The biggest swing in the GDP data this time we suspect will come from personal consumer spending. We already have two months of the quarterly data, which were not good, and the third, if retail sales is any guide, will again be soft. From 2.4% in 4Q15, we see this dropping to only about 1.0% in 1Q16.
The labour market remains a sector worth watching, and were we to see slower GDP growth matched with slower employment, then there would be genuine cause for concern as employment is a lagging indicator for the business cycle, and would tell us that things were already genuinely bad, not just weakening. The evidence from the labour market is very mixed, with temporary help jobs sending a warning signal, but initial claims suggesting that things have rarely been better. It is not clear which of these signals is giving the more accurate message.
Nevertheless, coming so soon after the April FOMC meeting, it is hard to see how these GDP figures will have any substantial impact on market expectations or pricing unless there is a big deviation from the consensus view of a 0.6% QoQ (saar) figure.”
Key Quotes
“Since 2Q15, when US GDP bounced strongly on a reversal of weather effects to 3.9% (QoQ, seasonally adjusted annualised rate (saar)) from only 0.6% in 1Q15, the numbers have got steadily lower. 3Q15 GDP fell back to 2.0%, not good, but perhaps acceptable after the abnormal bounce-back in 2Q, but then this was followed by only 1.4% in 4Q15.
The biggest swing in the GDP data this time we suspect will come from personal consumer spending. We already have two months of the quarterly data, which were not good, and the third, if retail sales is any guide, will again be soft. From 2.4% in 4Q15, we see this dropping to only about 1.0% in 1Q16.
The labour market remains a sector worth watching, and were we to see slower GDP growth matched with slower employment, then there would be genuine cause for concern as employment is a lagging indicator for the business cycle, and would tell us that things were already genuinely bad, not just weakening. The evidence from the labour market is very mixed, with temporary help jobs sending a warning signal, but initial claims suggesting that things have rarely been better. It is not clear which of these signals is giving the more accurate message.
Nevertheless, coming so soon after the April FOMC meeting, it is hard to see how these GDP figures will have any substantial impact on market expectations or pricing unless there is a big deviation from the consensus view of a 0.6% QoQ (saar) figure.”