ACTV - U.S. GDP Growth Slows Markedly And Inflation Remains The Focus
2024-04-26 03:25:00 ET
Summary
- US GDP growth slowed to 1.6% annualised in the first quarter of this year, less than half the 3.4% rate recorded in 4Q23, but core inflation was stronger, picking up from a 2% annualised rate to 3.7%.
- This implies upside risks to tomorrow’s key monthly core PCE deflator and makes a near-term rate cut even less likely.
- As for the growth outlook, we expect to see more subdued activity in upcoming quarters.
Higher inflation catches the markets' eye, rather than weaker growth
US first quarter GDP growth is an annualised 1.6%, well below the 2.5% consensus expectation, but inflation is hotter with the core PCE deflator up 3.7% annualised versus 3.4% expected. This suggests, assuming no revisions to monthly data, that the core PCE deflator will come in above 0.4% tomorrow rather than the current 0.3%MoM consensus forecast. Unsurprisingly, Treasury yields have pushed higher as if that is the case, it makes a near-term Federal Reserve interest rate cut look even more unlikely....
U.S. GDP Growth Slows Markedly, And Inflation Remains The Focus