• U.S. GDP growth slowed in the March quarter to 0.1% qoq (0.5% annualised), with softer consumption growth, and business investment and net trade again detracting from growth.
• We expect GDP growth of 1.8% in 2016 (previously 2.2%) and 2.1% in 2017 (previously 2.3%). The downward revisions include a lower expected productivity growth trend going forward and, as a result, we have lowered our expectation of the peak federal funds rate for this cycle to 2.5%.

Quarterly U.S. Gross Domestic Product (GDP) growth slowed to a weak 0.1% qoq, or 0.5% annualised in the March quarter. As the same quarter last year was also weak, there was little change in the over-the-year growth rate which has been around 2% for the last three quarters.

The details were mixed, although the weaker growth was due to slower inventory accumulation, a factor that tends to wash out over time. The most noticeable strength was in residential investment, while public demand also picked up a bit. However, the drag on growth from business investment and net trade intensified.

For further details please see the attached document:

• US Economic Update, 2016Q1 GDP (262 KB)