US: Weakness in Q1 not expected to persist - Wells Fargo

According to analysts from Wells Fargo, growth weakness experienced during the first quarter the US will no persist on the back of a very strong recovery in personal consumption expenditures. 

Key Quotes: 

“Weakness in U.S. economic growth in the first quarter of 2017 is not expected to persist or extend into the rest of the year. Weather and weather-related issues negatively affected U.S. consumers during the first quarter and made personal consumption expenditures very weak, growing by just 0.3 percent annualized during the first quarter of the year. The economy as a whole grew a scant 0.7 percent during the period, the slowest performance since the recovery from the Great Recession. However, the housing market contributed 0.5 percentage points to top-line growth as residential investment surged 13.7 percent due to the warm weather in some regions of the United States, but especially in the Northeast.”

“Our forecast has a very strong recovery in personal consumption expenditures, and this is fundamentally based on the continuous strength of the U.S. labor market, which created another 211,000 jobs in April and on a very low rate of unemployment, which hit 4.4 percent in April, a 10-year low. Productivity growth was another weak performer in Q1, declining 0.6 percent. Over the past year, productivity growth remains relatively flat, up only 1.1 percent. According to the chair of the Federal Reserve, Janet Yellen, U.S. economic growth could benefit from an increase in the participation of women in the labor force.”