One month after the first take of Q1 GDP surprised to the upside, printing at 2.3%, more than the 2.0% consensus estimate, moments ago the BEA reported that as part of its 1st revision of Q1 GDP data, the US economy grew slightly less than expected, with GDP rising an annualized 2.2% (technically 2.17%), missing expectations of a 2.3% print, and down from last month’s 2.32%.
The reason for the decline was a downward revision in Private Inventories, which dipped from the initial reading of 0.43% to just 0.13%, however offset by an increase in Fixed Investment from 0.76% to 1.05%. Meanwhile, net trade was also revised modestly lower, down from 0.2% in the first estimate to 0.08% currently.
Where there was no revision, however, was in personal consumption, which as noted last month, dropped from 2.75% to just 0.73%, the lowest since Q2 2013, largely as a result of a sharp drop in spending on autos and various other durable goods.
On an annualized basis, Personal consumption rose 1.0% in 1Q after rising 4.0% prior quarter.
Today’s release also disclosed that Corporate profits decreased 0.6% at a quarterly rate in the first quarter of 2018 after decreasing 0.1% in the fourth quarter of 2017. However, on a Y/Y basis, corporate profits rose 4.3% in 1Q after rising 2.7% prior quarter. Meanwhile, in what was a blockbuster quarter for banks, financial industry profits increased 0.5% Q/q in 1Q after falling 3% prior quarter. Oddly, Federal Reserve bank profits down 2.9% in 1Q after rising 0.7% prior quarter.
Finally, rate hike odds will likely ease further after today’s PCE data showed more softness, with the GDP deflator deflating from 2.0% to 1.9% (below the 1.9% expected), Core PCE rising 2.3%, also below the 2.5% expected, while Headline PCE of 2.6% completed the trifecta of misses, declining from 2.7% and missing the 2.7% consensus estimate.
Overall, between today’s miss in ADP and disappointing GDP print, we may see even more weakness on the dollar before the day is done.
via RSS https://ift.tt/2xxoeMi Tyler Durden