Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       

Blog Home
   Brian Wesbury
Chief Economist
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
X •  LinkedIn
  Real GDP Increased at a 1.6% Annual Rate in Q1
Posted Under: Data Watch • GDP • Government • Inflation • Markets • Fed Reserve • Interest Rates • Bonds • Stocks
Supporting Image for Blog Post


Implications:   The Fed is not going to like today’s report on GDP.  Yes, real GDP growth came in surprisingly slow in the first quarter, growing at a lukewarm 1.6% annual rate versus a consensus expected 2.5% pace.  That 1.6% rate is the slowest growth rate in almost two years and lower than the forecast from any economics group on Bloomberg.  However, we like to focus on “Core” GDP, which includes consumer spending, business fixed investment, and home building, while excluding government purchases, inventories, and international trade, the latter of which are very volatile from quarter to quarter.  Core GDP increased at a healthy 3.1% rate in Q1, with consumer spending growing at a 2.5% annual rate, fixed business investment growing at a 2.9% rate, and home building up at a 13.9% rate.  Meanwhile, inflation remained a big problem in the first quarter, with GDP prices up at a 3.1% annual rate, personal consumption prices up at a 3.4% pace, and core consumption prices up at a 3.7% rate.  None of these figures are close enough to the Federal Reserve’s 2.0% target for monetary policymakers to start cutting rates.  Nominal GDP – real GDP growth plus inflation – increased at a 4.8% rate in Q1 but is still up 5.5% from a year ago.  Yet another figure indicating that a tighter monetary policy has yet to seriously bite.  In turn, this means short-term interest rates will stay higher for longer and the risk of an eventual recession is not off the table.  Some analysts and investors believe economic growth is continuing only because of a “supply side” boom based on AI and other innovations.  But, if so, this supply-side boom would help push down inflation.  Instead, we think the economy is still feeling the lingering effects of loose money, which is keeping both growth and inflation elevated.  In other news this morning, new claims for unemployment insurance declined 5,000 last week to 207,000.  Continuing claims dropped 15,000 to 1.781 million.  Job growth continues in April.

Click here for a PDF version

Posted on Thursday, April 25, 2024 @ 10:46 AM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.