U.S. Outlook: Uneven growth with whiffs of higher prices

Scott Anderson
Posted by Scott Anderson
Chief Economist

This week’s U.S. Trade report for March revealed an even more lopsided trade performance than was estimated in last week’s Q1 GDP report.

Graph showing the downward movement of the trade deficit.Factoring in the March trade numbers, our current estimate of Q1 Real GDP dropped below stagnation into contraction territory (-0.3% annualized).

For more on this and other economic developments this week, see my full analysis. Highlights are outlined below, followed by a link to the full U.S. Outlook report, delivered on May 8.

Key observations:
  • Business investment is likely to remain weak at least for another quarter, while the U.S. trade deficit will be an even bigger drag on growth this year.
  • The solid bounce in global crude oil prices is likely helping to feed expectations in global bond markets that deflation will prove temporary.
  • More signs are popping up in the real economy that U.S. core inflation is likely to rise from here.
  • Market and Fed expectations around future inflation appear to be aligning nicely, keeping a September rate hike in sight.

 

Click here to read my full report.

 

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