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| US GDP: Trump hails pick-up in growth, but consumer spending slows - as it happened | |
| (32 minutes later) | |
| And finally, here’s our news story on the US GDP report: | |
| US economic growth stronger than expected despite weak demand | |
| Have a lovely weekend! GW | |
| European stock markets have closed for the night, with small losses in London and gains elsewhere. | |
| Investors seem to have shrugged at the US GDP report - understandable, given the weakness beneath the strong topline numbers. | |
| President Trump has also shown his market-moving powers, by knocking the oil price down. | |
| He performed this feat by telling reporters in Washington that he’d called the Organization of the Petroleum Exporting Countries and told them to get prices down. | |
| Trump declared: | |
| “Gasoline prices are coming down. I called up OPEC, I said you’ve got to bring them down. You’ve got to bring them down,” | |
| It’s not clear who Trump spoke to..... but traders have reacted by knocking Brent crude down by 3.5% to $71.76 per barrel. Yesterday it hit $75/barrel for the first time this year, after Trump tightened oil sanctions on Iran.... | |
| Here’s a clip of Larry Kudlow explaining that today’s GDP figure is a “blowout number”.....and that interest rates may need to fall! | Here’s a clip of Larry Kudlow explaining that today’s GDP figure is a “blowout number”.....and that interest rates may need to fall! |
| The U.S. economy is off to its best start to a year since 2015 and White House economic adviser Larry Kudlow believes it means the Federal Reserve should cut interest rates. https://t.co/kibcEikPwW pic.twitter.com/3HnNf6L8M4 | The U.S. economy is off to its best start to a year since 2015 and White House economic adviser Larry Kudlow believes it means the Federal Reserve should cut interest rates. https://t.co/kibcEikPwW pic.twitter.com/3HnNf6L8M4 |
| Robin Anderson, Senior Global Economist at Principal Global Investors reckons Donald Trump is right - there’s not enough inflationary pressure to justify an interest rate hike. | Robin Anderson, Senior Global Economist at Principal Global Investors reckons Donald Trump is right - there’s not enough inflationary pressure to justify an interest rate hike. |
| “The Fed has to be confident in its patient stance. The headline GDP print suggests that the U.S. economy is doing just fine, so there is no reason to cut rates. | “The Fed has to be confident in its patient stance. The headline GDP print suggests that the U.S. economy is doing just fine, so there is no reason to cut rates. |
| But, before the Fed hikes next, they want to see inflation come back to life. Right now, inflation is nowhere to be found.” | But, before the Fed hikes next, they want to see inflation come back to life. Right now, inflation is nowhere to be found.” |
| Bad news for the president - some economists predict US growth will decelerate in the coming quarters. | Bad news for the president - some economists predict US growth will decelerate in the coming quarters. |
| Here’s Ronald Temple, Head of US Equity at Lazard Asset Management. | Here’s Ronald Temple, Head of US Equity at Lazard Asset Management. |
| “While the headline US GDP number was much stronger than expected, the components that measure domestic demand were weak. Specifically, growth in real final sales to private domestic purchasers was only 1.3% versus 3.1% in 2018. | “While the headline US GDP number was much stronger than expected, the components that measure domestic demand were weak. Specifically, growth in real final sales to private domestic purchasers was only 1.3% versus 3.1% in 2018. |
| Looking beyond the first quarter, I continue to expect growth to decelerate from 2018, but still remain above 2% for the full year.” | Looking beyond the first quarter, I continue to expect growth to decelerate from 2018, but still remain above 2% for the full year.” |
| President Trump has cheered today’s growth figures: | President Trump has cheered today’s growth figures: |
| Just out: Real GDP for First Quarter grew 3.2% at an annual rate. This is far above expectations or projections. Importantly, inflation VERY LOW. MAKE AMERICA GREAT AGAIN! | Just out: Real GDP for First Quarter grew 3.2% at an annual rate. This is far above expectations or projections. Importantly, inflation VERY LOW. MAKE AMERICA GREAT AGAIN! |
| Why the reference to inflation? That’s a clear hint to America’s central bankers not to raise interest rates -- something that could slow the economy ahead of the next presidential election. | Why the reference to inflation? That’s a clear hint to America’s central bankers not to raise interest rates -- something that could slow the economy ahead of the next presidential election. |
| Shares have dipped slightly on the New York stock exchange, as traders digest the GDP numbers. | Shares have dipped slightly on the New York stock exchange, as traders digest the GDP numbers. |
| The Dow Jones industrial average is down 20 points, or 0.07%, while the tech-focused Nasdaq has lost 0.3%. | The Dow Jones industrial average is down 20 points, or 0.07%, while the tech-focused Nasdaq has lost 0.3%. |
| Stephen Hubble, Chief Analyst at currency firm Centtrip, explains: | Stephen Hubble, Chief Analyst at currency firm Centtrip, explains: |
| “US GDP smashed the forecast of 2% growth, having come in at 3.2% for the first quarter of the year. | “US GDP smashed the forecast of 2% growth, having come in at 3.2% for the first quarter of the year. |
| However, the market reaction was muted due to a surprise drop in personal consumption expenditure (PCE) measuring inflation in goods and services. | However, the market reaction was muted due to a surprise drop in personal consumption expenditure (PCE) measuring inflation in goods and services. |
| Leading Republican Newt Gingrich is hailing the “Trump effect” - again, ignoring that the detail of today’s growth report isn’t as strong as the top line. | Leading Republican Newt Gingrich is hailing the “Trump effect” - again, ignoring that the detail of today’s growth report isn’t as strong as the top line. |
| The report the American economy grew by 3.2% in first quarter is further proof of the Trump Effect on our economy.Despite the negative media and the destructive congressional Democrats President Trump is implementing a pro jobs, pro income increase,pro growth policy that works. | The report the American economy grew by 3.2% in first quarter is further proof of the Trump Effect on our economy.Despite the negative media and the destructive congressional Democrats President Trump is implementing a pro jobs, pro income increase,pro growth policy that works. |
| Donald Trump’s political allies are cheering today’s GDP report (and not digging into the problems economists have spotted). | Donald Trump’s political allies are cheering today’s GDP report (and not digging into the problems economists have spotted). |
| ➡️ "Beautiful"➡️ "Strong"➡️ "Extraordinary"➡️ "Incredible"That's the Trump effect. 3.2% GDP for the first quarter, and no sign of slowing down. https://t.co/tj5Sm4LwGT | ➡️ "Beautiful"➡️ "Strong"➡️ "Extraordinary"➡️ "Incredible"That's the Trump effect. 3.2% GDP for the first quarter, and no sign of slowing down. https://t.co/tj5Sm4LwGT |
| Donald Trump’s top economic adviser Larry Kudlow is discussing the growth report on CNBC now. | Donald Trump’s top economic adviser Larry Kudlow is discussing the growth report on CNBC now. |
| He says the 3.2% growth rate is strong, and a positive sign of Trump’s handling of the economy. | He says the 3.2% growth rate is strong, and a positive sign of Trump’s handling of the economy. |
| But he then goes on to suggest that interest rates may need to be cut, due to slowing inflation.... | But he then goes on to suggest that interest rates may need to be cut, due to slowing inflation.... |
| First White House reaction to GDP report: Kudlow: It's a blowout number; It's extremely positive; The inflation rate continues to slip lower and lower; Could be a rate cut on the way --CNBC | First White House reaction to GDP report: Kudlow: It's a blowout number; It's extremely positive; The inflation rate continues to slip lower and lower; Could be a rate cut on the way --CNBC |
| Larry Kudlow is calling for a rate cut on @CNBC after GDP growth picked up to 3,2% in Q1. This will be a fun summer for the #FederalReserve | Larry Kudlow is calling for a rate cut on @CNBC after GDP growth picked up to 3,2% in Q1. This will be a fun summer for the #FederalReserve |
| Currency analyst Marc-André Fongern, though, argues that America’s economy is too strong to justify interest rate cuts. | Currency analyst Marc-André Fongern, though, argues that America’s economy is too strong to justify interest rate cuts. |
| The details are telling us GDP data is mixed. Ok, but the U.S. just expanded 3.2% while the rest of the world, especially Europe is fragile. | The details are telling us GDP data is mixed. Ok, but the U.S. just expanded 3.2% while the rest of the world, especially Europe is fragile. |
| The US dollar is still the pole position starter...Please, end the talk of rate cuts. | The US dollar is still the pole position starter...Please, end the talk of rate cuts. |
| Strong job market, strong GDP growth compared to Europe (Germany)...Of course there is something on the horizon which suggests that Q2 GDP isn't going to be as good as Q1, but the elimination of rate cut talks is a bullish factor for the USD in an unsteady G10 world. https://t.co/l2wWV4MBtL | Strong job market, strong GDP growth compared to Europe (Germany)...Of course there is something on the horizon which suggests that Q2 GDP isn't going to be as good as Q1, but the elimination of rate cut talks is a bullish factor for the USD in an unsteady G10 world. https://t.co/l2wWV4MBtL |
| Jason Furman, who chaired President Obama’s Council of Economic Advisers, also urges caution about the growth figures: | Jason Furman, who chaired President Obama’s Council of Economic Advisers, also urges caution about the growth figures: |
| First quarter GDP is 3.2% but the underlying data is much weaker and is consistent with a slowing economy. | First quarter GDP is 3.2% but the underlying data is much weaker and is consistent with a slowing economy. |
| GDP is volatile so this is weak signal. But to the degree today’s data has any info it is that the underlying trend of consumption and investment is weakening. And no reason to believe we’ll get lucky again next quarter with inventories, NX, and govt. | GDP is volatile so this is weak signal. But to the degree today’s data has any info it is that the underlying trend of consumption and investment is weakening. And no reason to believe we’ll get lucky again next quarter with inventories, NX, and govt. |
| Paul Ashworth of Capital Economics isn’t impressed with the blowout US growth report. | Paul Ashworth of Capital Economics isn’t impressed with the blowout US growth report. |
| He argues that the underlying picture is weaker than the 3.2% headline growth figure suggests, once you strip out certain elements: | He argues that the underlying picture is weaker than the 3.2% headline growth figure suggests, once you strip out certain elements: |
| Taking out the over-sized boosts from net trade, inventories and highways investment, which will all be reversed in the coming quarters, growth was only around 1.0%. | Taking out the over-sized boosts from net trade, inventories and highways investment, which will all be reversed in the coming quarters, growth was only around 1.0%. |
| Under those circumstances, we continue to expect that overall growth will slow this year, forcing the Fed to begin cutting interest rates before year-end. | Under those circumstances, we continue to expect that overall growth will slow this year, forcing the Fed to begin cutting interest rates before year-end. |