GDP report. We now look for an annualized growth rate of 2.6%
|U.S. Review
Outlook for Q1 GDP Is Brighter, But Can it Be Sustained?
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Two indicators this week turned the tables on what to expect out of next week's GDP report. We now look for an annualized growth rate of 2.6% for the economy in the first quarter.
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An unexpected narrowing in the trade deficit is one rationale, as this indicates a big boost from trade. A surge in civilian aircraft exports was a key factor and one that we do not see as sustainable.
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Retailers posted the best monthly increase in a year and a half, which means less of a slowdown in consumer spending than many had feared. Thanks to a solid labor backdrop and other positive fundamentals, the consumer spending story has legs.
Global Review
Some Signs of Life for the Global Economy
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The past week has seen some more hopeful signs for the global economy. In particular, China's Q1 GDP beat expectations, holding steady at 6.4% year-over-year, while March retail sales and industrial output quickened from their January-February pace.
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Developments from Europe were mixed. U.K. economic figures remain resilient overall even in the face of Brexit uncertainty, including a sizable gain in March retail sales. However, Eurozone April manufacturing confidence rose less than expected, while service sector confidence fell more than expected.
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