donderdag 29 juni 2017

Final Q1 GDP Revised To 1.4% Due To Spike In Consumer Spending; Corporate Profits Tumble

Moments ago the BEA released its third estimate of GDP, according to which Q1 GDP rose by 1.4% in the quarter, above the second estimate of 1.2%, and double the initial estimate of 0.7%. It was also above the consensus estimate of 1.2%, primarily as a result of a jump in personal consumption, which contributed 0.75% to the bottom line, well above the 0.44% estimated last quarter. In annualized terms, personal consumption rose 1.1% in 1Q, beating estimates of 0.6%, and above the 0.6% second estimate however, it was still well below last quarter's 3.5% increase...


In addition to consumer spending, the upward revision to GDP growth reflected upward revisions to exports, which were partly offset by a downward revision to business investment...


Additionally, denying the poor recent string of CPI prints, inflation continued to run hot, with prices of goods and services purchased by U.S. residents increased 2.5% in the first quarter after increasing 2.0% in the fourth quarter. Excluding energy and food, prices rose 2.2 percent after increasing 1.6 percent. On a Q/Q basis, Core PCE Prices rose 2.0%, missing the expectations of a 2.1% increase, while the final GDP price index rose 1.9%, below the expected 2.2%. Despite the weaker dollar in Q1, net trade contributed only 0.2% to the bottom line GDP...


And now for the bad news: corporate profits decreased 2.3 percent at a quarterly rate in the first quarter of 2017 after increasing 0.5 percent in the fourth quarter of 2016, a far cry from the non-GAAP numbers posted by S&P companies. Profits of domestic nonfinancial corporations decreased 1.0 percent after decreasing 4.9 percent. Profits of domestic financial corporations decreased 5.4 percent after increasing 5.4 percent. Profits from the rest of the world decreased 2.1 percent after increasing 11.0 percent.
# Still, as Citi summarizes, "this data argues that even with the list of challenges discussed in the market in Q1, the data suggests the strength of the US economy was underestimated. Will we see more of that in the data (or data revisions) ahead?"