US: GDP growth is expected to rebound strongly in Q2 - Wells Fargo

Next Friday, US GDP data is due. According to analysts from Wells Fargo, the economy rebounded strongly during the second quarter. They forecast a rise of 4.7% (q/q annualized), above the consensus forecast of 4.0%. 

Key Quotes: 

“After rising a tepid 2.0 percent annualized in Q1, GDP growth is expected to rebound strongly in Q2. We look for GDP to rise to a 4.7 percent annualized pace amid a sharp narrowing in the trade deficit and pickup in consumer and business spending. Solid retail sales, rising wages and strong job gains support our forecast for consumer spending to rise to a 3.3 percent annualized clip. Business spending also likely remained solid, albeit growing at a slower rate than the run up seen in Q1.”

“Q2 GDP also likely got a boost from stronger exports as businesses tried to get ahead of retaliatory tariffs, and we look for the narrowing in the trade deficit to add 1.2 percentage points to topline growth. 

“The trends behind the likely Q2 rebound should support solid growth in H2-2018, although trade tensions present a possible downside risk to our outlook.”