US: Only a small dip in growth - Commerzbank

Dr Jörg Krämer, Chief Economist at Commerzbank, notes that in Q1, the US economy expanded at an annualised rate of only +0.5%, down from +1.4% in the final quarter of 2015.

Key Quotes

“Growth was held back by consumer restraint, weak exports and a decline in private investment in equipment and in commercial construction. The latter is mainly due to drastic cuts in investment in oil and gas production. In contrast, residential investment rose sharply once again, growing by 15%.

We expect somewhat stronger growth for the coming quarters. Consumers’ incomes, and thus their consumption capacities, continue rising at a solid pace. Since the external value of the dollar and the oil price have stabilised, these adverse factors for external trade and investment should lose some strength. Moreover, Q1 growth in recent years regularly came in below average, which points to problems in adjusting the data for seasonal variations.

But due to the weak first quarter, we have lowered our forecast for growth in 2016 from 2.0% to 1.8%.”