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James Knightley, chief international economist at ING, suggests that there has been a dramatic turnaround in recent weeks for the US economy and they are looking for growth of 2.5% while the consensus is a little more cautious in forecasting 2.2% growth for 1Q.

Key Quotes

“The Atlanta Federal Reserve bank has a model that predicts GDP based on released data, called GDP Now, which really highlights the change of fortunes. Just four weeks ago, it was suggesting the US 1Q GDP figure could be as low as 0.2%. Today, it’s suggesting that we should be looking for 2.8% thanks to strong retail sales, construction and ISM manufacturing numbers. Such an outcome would be well ahead of the 2.2% rate recorded in 4Q18.”

“Consumer spending will have slowed to something around the 1.4% mark given the monthly numbers already released, but the latest retail sales numbers for March suggest that spending will have ended the quarter in a good position, with positive momentum heading into 2Q.”

“Investment is likely to have done well with residential investment set to bounce back after contracting in every quarter through 2018 – lower mortgage rates are certainly supporting mortgage applications. Investment in equipment should be firm while government spending is likely to have bounced after the government shutdown through much of December and January.”

“We also know that trade will be making a major positive contribution as firms brought forward imports to 4Q ahead of the anticipated hike in tariffs from 1 January.”