US Economy Likely Advanced At A Slower Pace In Q1, 2017 -

US Economy Likely Advanced At A Slower Pace In Q1, 2017

Apr 28, 2017Jeremy ParkinsonFinance0

The preliminary estimates for the first quarter’s gross domestic product (GDP) for the U.S. will be published today by the Department of Commerce.

Economists polled have forecast that the pace of economic activity in the three months ending March might have increased at a slower pace of 1.3%, compared to the previous quarter (Q4) of 2016.

The U.S. economy advanced 2.1% in the fourth quarter of 2016 on an annual basis. It was also a weak print as economic activity was suppressed as a result of a decline in exports.

The U.S. GDP expanded at a pace of 1.9% on an annual basis and was significantly lower from the 3.5% growth registered in the third quarter of 2016. For the whole period of 2016, the U.S. GDP expanded at a pace of 1.6% which was the slowest pace of expansion in a five-year period.

Weak expansion set to continue into Q1 2017

Prospects for a weak headline print is widely anticipated and priced in as the first quarter pace of growth mirrors the economic activity from last year. However, despite some bleak numbers, the economic activity is expected to have regained some of the lost momentum heading into the second quarter.

Various measures of the U.S. quarterly GDP growth point to below-forecast expectations.

The widely tracked GDPNow model from the Atlanta Fed shows that economic expansion slowed to a pace of 0.2% in the first quarter. This was down from the previously estimated 0.5%. The Atlanta Fed said that the first quarter real consumer spending growth declined to 0.1% after this week’s annual retail trade revision.

Atlanta Fed GDPNow Forecast Q1 GDP: 0.2% (Source: FRB Atlanta)

The contribution of inventory investment also fell 1.11% as a result of yesterday’s durable goods orders numbers.

The U.S. Department of Commerce released the monthly durable goods orders for March which showed a modest pickup but was far from positive.

Orders for durable goods increased 0.7% from the previous month and marked the slowest pace of increase in the three months. Excluding transportation, the core durable goods orders fell 0.2% during the month.