28 Apr 2016
US economic recovery stalls in Q1 – TDS
Research Team at TDS, suggests that the US economic recovery has stalled, as growth momentum has slowed for the third consecutive quarter.
Key Quotes
“In Q1, TD is forecasting a very meager 0.8% q/q annualized advance, down from the more respectable 1.4% q/q gain in the prior quarter. The Nowcasting forecasts from the NY Fed and Atlanta Fed stand at 0.8% q/q and 0.6% q/q, respectively.
The drop in economic growth momentum will mark the slowest pace of GDP growth since the same period last year as the headwinds from the sluggish external backdrop and lower energy prices, along with the sharper than expected inventory drawdown temper domestic economic activity.
Consumer spending should remain the mainstay for economic activity this quarter, though its contribution to growth will decline to a paltry 1.3ppts. Government consumption should also add modestly to growth.
The overall tone of the Q1 GDP report should be disappointing, with the expected 1.1% q/q advance in final sales marking the slowest pace of growth in this indicator since last year, underscoring the weakening in the domestic fundamental backdrop. In the coming months, TD expects the recovery to regain its footing, with economic growth rebounding to the upper-end of the 1.5% to 2.0% range in Q2.
Even if our forecast risk is realized, we do not think the USD will gather much strength. Instead, we look for the move to be fleeting especially with the Fed noting a softer growth backdrop in its latest statement and our tracking estimates pointing towards a soft handoff to Q2.”
Key Quotes
“In Q1, TD is forecasting a very meager 0.8% q/q annualized advance, down from the more respectable 1.4% q/q gain in the prior quarter. The Nowcasting forecasts from the NY Fed and Atlanta Fed stand at 0.8% q/q and 0.6% q/q, respectively.
The drop in economic growth momentum will mark the slowest pace of GDP growth since the same period last year as the headwinds from the sluggish external backdrop and lower energy prices, along with the sharper than expected inventory drawdown temper domestic economic activity.
Consumer spending should remain the mainstay for economic activity this quarter, though its contribution to growth will decline to a paltry 1.3ppts. Government consumption should also add modestly to growth.
The overall tone of the Q1 GDP report should be disappointing, with the expected 1.1% q/q advance in final sales marking the slowest pace of growth in this indicator since last year, underscoring the weakening in the domestic fundamental backdrop. In the coming months, TD expects the recovery to regain its footing, with economic growth rebounding to the upper-end of the 1.5% to 2.0% range in Q2.
Even if our forecast risk is realized, we do not think the USD will gather much strength. Instead, we look for the move to be fleeting especially with the Fed noting a softer growth backdrop in its latest statement and our tracking estimates pointing towards a soft handoff to Q2.”