The US Commerce Department will be releasing the third and final estimates of the first quarter GDP today. Economists forecast no changes and confirm that the US economy grew at a pace of 3.1% in the first three months of the year.
Today’s GDP report is unlikely to move the markets much, even if there is an upside surprise. With a host of other data sets due over the course of the week, investors and markets will be looking to the latest data.
Following last week’s FOMC meeting, where the Fed signaled its plan to cut rates, today’s final GDP estimates could be overlooked by the markets. Other important events over the week include this Friday’s personal income and spending data. The latest personal consumption expenditure report will also be coming out.
Still, with the final estimates, the US economy is set to mark 10 years of economic expansion so far. This also happens to be the longest economic growth in US history.
US GDP Rises 3.1% in Q1 – 2nd Estimates
During the second revised GDP estimates, the US economic growth in the first three months of the year was revised a tad lower. The initial estimates saw GDP growth at 3.2%.
US GDP, Q1 2019 – 3.1%
This was higher than the estimates that forecast a 2.2% increase. In the fourth quarter of 2018, the US economy saw its quarterly growth rate being revised down to 2.2%. This was down from the 2.6% increase initially reported.
The GDP growth rate was revised lower to 3.1%. While this was still a solid performance, growth figures were propped up by the volatile components such as exports, inventory and defense spending.
When excluding the trade, government spending and inventories, the US GDP growth rate was seen at just 1.3%. This was the slowest pace of increase since the second quarter of 2013.
The gross domestic income, however, advanced 1.4% in the first quarter. This was a marked increase from the 0.5% expansion in the previous quarter.
With exports fizzling out in the second quarter, investors are already gearing up to see a below 3% average GDP growth for the three months ending June 2019.
GDP Could be Revised Slightly Higher
Despite the median estimates showing no revisions to the GDP data, there is scope for a revised figure. This comes as the latest current account deficit figures narrowed in the first three months of the year.
The current account deficit or CAD is a measure of the economy’s trade and financial flows with its trading partners. Data from the department of commerce revealed that the US current account deficit narrowed to a seasonally adjusted $130.40 billion.
Economists forecast the current account deficit to narrow to $122 billion.
This was down from $143.93 billion in the fourth quarter of 2018. The Q4 current account deficit was also revised higher from $134.38 billion.
The decline in the current account deficit came due to a decline in the goods trade deficit during the reporting period. There was also a slowdown in the flow of profits earned abroad being repatriated to the US
While the current account deficit has narrowed, the impact of this on the GDP could, however, remain minimal.
Overall, the final GDP figures from the US will confirm one of the best possible GDP growth rates in recent times, on a quarterly basis. With the markets already discounting the news, the focus turns to the second quarter data.
Preliminary business surveys already indicate a somewhat mixed picture. Growth is expected to be hit due to the ongoing trade tiffs with the US and China. The US administration narrowly avoided hitting Mexico with planned tariffs as well.
Questions remain on how much of a slowdown can be expected from the US economy. The Fed has already signaled the markets of a rate cut, in anticipation of this.