US Economic Update – April 2013

Partial data for the March quarter are pointing to a noticeable pick-up in GDP growth following only weak growth in the December quarter. We are expecting GDP growth of 2.4% (revised from 2.2%) in 2013 and 2.9% in 2014. While we expect growth to slow modestly in the June quarter, it ….

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  • Partial data for the March quarter are pointing to a noticeable pick-up in GDP growth following only weak growth in the December quarter.
  • We are expecting GDP growth of 2.4% (revised from 2.2%) in 2013 and 2.9% in 2014. While we expect growth to slow modestly in the June quarter, it will still be at a reasonable (around trend) level in the quarter and slightly stronger over the rest of the year. Federal fiscal policy will be the main drag on activity.
  • Monetary policy easing in the form of Fed asset purchases or QE to continue through to end 2013. Before the QE program ends completely it is likely to be reduced in size (so called ‘tapering’) although weak March employment data has delayed the time this intermediate step might occur.

Economic Overview

Economic indicators available for the March quarter are pointing to a noticeable pick-up in GDP growth following only weak growth in the December quarter (recently revised up to 0.4% qoq annualised rate). We are currently expecting March quarter GDP growth of 0.8% qoq (3.3% annualised) reflecting stronger consumption growth and inventory accumulation, a smaller detraction from public demand, as well as continuing growth in business and housing investment.

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