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29 Jan 2016
US 4Q GDP adds further doubts to the Fed - ING
FXStreet (Córdoba) - Rob Carnell, analyst at ING Bank, presents details of today’s US 4Q GDP. The economy rose at an annualized rate of 0.7%, down from the 2.0% of the previous quarter. It was the first reading.
Key Quotes:
“The trend in US growth has clearly slowed. Even allowing for the fact that this data is choppy, and considering the last two quarters as a moving average, growth is now barely 1.5%, and is probably consistent with a widening, not a closing output gap. If this feeds through into softer hiring trends, then we can forget further rate hikes from the Fed anytime soon.”
“ The slowdown in growth is mainly based on a slowdown in domestic demand (…) Investment is another key element of domestic demand that has declined, with business investment of -2.5%QoQ in 4Q15 a worrying new development – though admittedly following very strong 3Q15 growth.”
“The drag from net exports was also about 0.5%, dominated by weaker exports – this is a combination of soft overseas demand and stronger USD.”
“All in all, these GDP data support the sense given by recent monthly numbers that the US economy lost momentum into the end of 2015. We are struggling to see how this story is reversed in the coming quarters, and will likely be trimming our growth, inflation and Fed rate forecasts accordingly.”
Key Quotes:
“The trend in US growth has clearly slowed. Even allowing for the fact that this data is choppy, and considering the last two quarters as a moving average, growth is now barely 1.5%, and is probably consistent with a widening, not a closing output gap. If this feeds through into softer hiring trends, then we can forget further rate hikes from the Fed anytime soon.”
“ The slowdown in growth is mainly based on a slowdown in domestic demand (…) Investment is another key element of domestic demand that has declined, with business investment of -2.5%QoQ in 4Q15 a worrying new development – though admittedly following very strong 3Q15 growth.”
“The drag from net exports was also about 0.5%, dominated by weaker exports – this is a combination of soft overseas demand and stronger USD.”
“All in all, these GDP data support the sense given by recent monthly numbers that the US economy lost momentum into the end of 2015. We are struggling to see how this story is reversed in the coming quarters, and will likely be trimming our growth, inflation and Fed rate forecasts accordingly.”