Q1 Growth Comes in a Paltry 0.7 Percent

Wells Fargo Research Team Wells Fargo

U.S. Review

Q1 Growth Comes in a Paltry 0.7 Percent

Residual seasonality likely deserved some of the blame in the weak numbers in this morning’s Q1 GDP report, and the slowdown in personal consumption was also a major factor. That said, many factors that weighed on consumption were transitory, and business investment has perked up.
Other economic data released this week point to an economy on solid footing. The housing market had a strong start to the year but is constrained by lean inventory, as evidenced by new and pending home sales data. Consumers are in high spirits and confident in the economic outlook, particularly in terms of job prospects, according to surveys released this week.

Global Review

Eurozone: Diminution of Downside Risks?

Markets breathed a sigh of relief this week following the first round of the French presidential election. Polls show that the centrist Emmanuel Macron should beat the populist Marine Le Pen in the second round of the election on May 7.
The ECB kept its main policy rates on hold this week, but said that the downside risks to the outlook were starting to diminish. The ECB likely will maintain the current size of its QE program for the next few months, but it could announce plans sometime this summer to “taper” further if the economic outlook remains sanguine and/or inflation continues to trend higher.

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Wells Fargo Research Team

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