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“The official GDP figure published today by the Bureau of Economic Analysis beat the Atlanta Fed’s nowcast and came in at 3.2%,” Rabobank analysts note.

Key quotes

“However, the government shutdown, trade wars, government spending and seasonality issues have distorted this GDP growth figure significantly. On the positive side, the government shutdown should have subtracted 0.4 ppt from Q1 GDP growth, according to estimates by the Congressional Budget Office. This means that without this episode today’s figure would have been 3.6%.”

“What’s more, due to residual seasonality in the data Q1 GDP growth is systematically weaker than other quarters. This means that true momentum in the economy would be above 3.6%.”

“However, the yield curve remains partially inverted. Therefore we continue to expect the economy to fall into recession in 2020H2. Consequently, we think that the Fed will be forced to start cutting rates in 2020.”