Goldman Boosts Q2 GDP Forecast Due To Weaker Than Expected Q1 GDP

Tyler Durden's picture

Today is the day when economists weathermen everywhere jump the shark. Here's Goldman's Jan Hatzius.

BOTTOM LINE: Q1 GDP was revised lower than expected, mainly due to a larger drag from inventories. Initial jobless claims fell more than expected, while continuing claims declined to a new post-recession low. Because of weaker inventory investment in Q1, we increased our Q2 GDP tracking estimate by two-tenths to 3.9%.

 

Main Points:

 

GDP growth in Q1 was revised to -1.0% (vs. consensus -0.5%), from +0.1% initially reported. Almost all of the net revision was due to a larger drag from inventory investment, which contributed -1 percentage point (pp) to the revision. Inventory investment is now estimated to have reduced GDP growth by 1.6 pp in Q1. Net exports (-0.1pp) and government (-0.1pp) also subtracted, although business fixed investment (+0.1pp) and personal consumption expenditures (+0.1pp) provided partial offsets. Real final sales—GDP excluding inventory investment—was revised down only one-tenth to +0.6%. Real gross domestic income (GDI) for Q1—first reported in today's report—fell 2.3%, the worst performance since the recession. The core PCE price index rose at a 1.2% annualized rate in Q1, one-tenth lower than initially reported.

 

Because of weaker inventory investment in Q1, we increased our Q2 GDP tracking estimate by two-tenths to 3.9%.

Why are you still reading? You should be BTFATH - after all corporations have billions more in stocks to buyback!