The first look at Q1 2019 gross domestic product
- Q4 was 2.2% after initially printing 2.6%
- Q3 was 3.4%
- Personal consumption +1.2% vs +1.0% expected
- Q4 personal consumption was +2.5%
- Consumer spending on durables -5.3% vs +3.6% prior
- Business investment +2.7%
- Home investment -2.8%
- Exports +3.7%
- Imports -3.7%
- Net trade added 1.03 pp to GDP (largest in six years)
- Inventories add 0.65 pp to GDP
- Inventories +$128.4 billion
- Government spending added 0.41 pp to GDP
- GDP ex motor vehicles +3.2% vs +2.1% prior
- Final domestic demand +1.3% -- slowest since Q2 2013
- Residential construction -2.8%, the fifth consecutive quarterly decline
Inventories and trade were big driving factors in the beat and consumer spending was also a slight positive. The problems with the trade and inventory numbers is that they're likely to reverse. Inventories are the highest since 2015.
Inflation data:
- GDP price index +0.9% vs +1.2% expected (prior was 1.7%)
- Core PCE +1.3% q/q vs 1.4% expected (prior was 1.8%)
- GDP deflator +0.6% vs +1.3% expected
A big part of the GDP beat was surprisingly low inflation.
The dollar jumped initially on the headlines but reversed as the details showed it was all about temporary factors and that underlying consumption and business investment were soft. That will mean downgrades to Q2 GDP as the factors unwind.
