April 28, 2016

US real GDP growth registered a disappointing 0.5 per cent in the first quarter of 2016, the slowest quarterly growth in two years. Growth was pulled lower by a softening of consumer spending as well as the high US dollar's impact on exports. It should be noted that today's release is a preliminary estimate and is subject to revisions which can be substantial. 

As noted yesterday afternoon by the US Federal Reserve's Open Market Committee in its decision to leave its target interest rate unchanged, the US faces some headwinds from a struggling global economy but consumer demand is expected to accelerate, buoyed by strong gains in the labour market.  We expect that the US economy will get back on track in subsequent quarters, ultimately expanding 2.2 per cent in 2016. Low growth and modest inflationary pressure should keep the Federal Reserve sidelined most of this year, though one more rate-hike before the end of the year remains likely.