US Q1 data was out last night. Goldman updates us.
Real GDP rose 1.1% annualized in the first quarter, eight tenths below consensus expectations. The details were stronger, however, as inventories provided a 2.3pp drag to GDP growth and domestic final sales increased 3.2%. Consumption reaccelerated to 3.7%, as we expected, while business fixed investment slowed to 0.7%. Both the GDP price index and the core PCE price index increased by more than expected. Following today’s report, we increased our March core PCE estimate by 4bp to 0.32% (mom) and increased our March headline PCE estimate by 3bp to 0.11% (mom), corresponding to year-over-year rates of +4.62% and +4.18%, respectively. We will launch Q2 GDP tracking following tomorrow’s personal income and spending details. Initial claims declined against consensus expectations for a modest increase.
That is, growth was weak while inflation was strong.
