US Q1 GDP Preview: Expecting a decline of 1.2% – Wells Fargo

Next Wednesday, the first estimate of Q1 GDP data is due in the US. Analysts at Wells Fargo forecast a reading (q/q annualized) of -1.2%, below market consensus. 

Key Quotes: 

“The U.S. economy came to a grinding halt in March as workers were sent home and asked to stay there as the nation battled COVID-19. Prior to the domestic outbreak, economic activity was fairly strong at the start of the year. But the suspension of activity in March was so abrupt and far-reaching that we think it was enough to pull first quarter growth negative. There is no corner of the economy that is sheltered from this public health crisis.”

“Personal consumption expenditures will likely be modestly negative in Q1 as consumers began to withdraw themselves from the economy. Business investment spending will be weak, as businesses likely grew cautious and began to pare back spending even before lockdowns were officially put in place. Residential investment may be one of the only sources of strength in Q1, but any momentum likely dried up by quarter-end. In many ways market participants are already looking ahead as the bulk of the COVID-19 hit is expected in Q2.”