US: Q1 real GDP growth to come in at 1.6% - Nomura

Analysts at Nomura expect the first reading of US Q1 real GDP growth to come in at 1.6% q-o-q saar, the first sub-2% print since Q1 2017.

Key Quotes

“Consumer spending has been tepid over the past three months, contrasting somewhat with elevated consumer optimism and firm fundamentals. Thus, we expect somewhat soft PCE growth in Q1 to be largely temporary. Besides weaker-than-expected personal spending, net exports and residential investment are likely to add some drag on growth. Imports in Q1 likely rose by a notable 8.5% while export growth decelerated to 2.1%, from 7.0% in Q4 2017. Residential investment likely pulled back as hurricane rebuilding efforts waned and new home sales softened.”

“We expect non-residential investment to be mixed: a fall in equipment investment should be more than offset by positive contributions from structures and intellectual property products. The largest contributor to Q1 GDP growth is likely to be a robust build-up in inventories. We expect that inventory accumulation overall will contribute 1.4pp to top-line GDP growth in Q1. Finally, government spending likely picked up modestly in Q1, but we expect the quarters ahead will show much larger increases as the Congressional spending deal goes into effect.”