US Economic Update – US GDP Q1 2014

US GDP growth slowed sharply in the March quarter. This, at least in part, reflected the harsh winter and also a correction to the strong growth seen in the second half of 2013 as inventory accumulation slowed and net export gains were reversed.

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  • US GDP growth slowed sharply in the March quarter.
  • This, at least in part, reflected the harsh winter and also a correction to the strong growth seen in the second half of 2013 as inventory accumulation slowed and net export gains were reversed.
  • Growth is expected to be stronger over the rest of the year. We have revised our 2014 forecast down but still expect growth of around 2½% and just under 3% in 2015 (unchanged).
  • The Fed continues to reduce the size of its QE asset purchases, which are likely to come to an end in the fourth quarter.

US GDP growth slowed sharply in the March quarter, with growth of only 0.1% qoq (annualised rate). Several factors appear to be at play. These include a correction to strong growth in the second half of the year as inventory accumulation slowed and the strong December quarter net export performance was unwound. Equipment investment also declined after spiking towards the end of 2013. A harsh winter also likely had an impact although it is difficult to quantify, particularly given that strong power consumption provides an offset.

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