US: Another disappointing Q1 GDP growth print – Danske Bank

Research Team at Danske Bank, suggests that once again, US GDP growth in Q1 disappointed as it slowed to 0.8% q/q AR.

Key Quotes

“While cold winters were to blame for the past two years, the winter was warm this year and thus the explanation lies somewhere else – we think the financial turmoil and significant drop in oil prices had a significant impact. Despite the slowdown in Q1 and weak jobs reports, we do not think the economic upturn has come to an end: Q2 data released so far has shown that the domestic economy has picked up again.

We expect the US to grow around 2.0-2.5% driven mainly by private consumption. Also, the economy faces less headwind than previously: USD has weakened, credit spreads are lower, oil prices have rebounded and China has stabilised. One major risk factor is the UK’s EU referendum, as Europe risks falling into a technical recession in case of a ‘Brexit’.

The US is not immune to negative shocks from other economies and lower economic growth in Europe would hit the US too, as was the case during the European debt crisis. Another political risk factor is the upcoming US presidential election in November although we do not think it will have a significant impact on the economy.”