U.S. Outlook: What to expect from next week’s Q1 GDP release
The time has finally come. No, I’m not talking about the Mueller Report. I’m talking about the advanced release of first quarter GDP.
Just four months into 2019 and we have already had a year’s worth of GDP estimate revisions and sentiment swings.
We started the year with stocks finishing their worst quarter since 2011, and the bond market sending ominous signals of economic calamity ahead. Flash forward to today and stocks are reaching for new record highs — the S&P 500 was just 0.9 percentage points below its September 20 record high as of Thursday’s close.
Yet investor confidence remains in the dumps. An investor confidence index from State Street shows institutional investors on balance are continuing to decrease their long-term allocations to risky assets. As of March, this measure of investor confidence was still well below 2008 levels.
For more on this, see highlights of my report below, followed by a link to the full U.S. Outlook, delivered on April 19.Key observations:
- The Atlanta Fed’s GDPNow forecast for Q1 2019 started at a paltry 0.17%, before surging in recent weeks to 2.8%.
- We expect the advance estimate of Q1 GDP to be a comfortable 2.6%, even higher than the fourth quarter’s 2.2% performance.
- About one percentage point of that 2.6% Q1 growth rate is expected to come from an inventory build (0.4 percentage points) and an improvement in the trade deficit (0.6 percentage points). Neither boost is expected to be repeated in the second quarter.