29 Apr 2015
US Q1 GDP risks a slight below consensus print – ING
FXStreet (Barcelona) - Rob Carnell, Chief International Economist at ING, previews the US Q1 GDP release, and forecasts a slight below consensus print.
Key Quotes
“The main sources of forecast error are the usual suspects – net exports and inventories. The ports strike will have dented US exports, and dampened production. But it will also have prevented imports from landing, and whilst that could lead to a backlog of imports in 2Q15, those perishable imports that did not make it, now never will.”
“As usual, the first estimate of GDP is made with only two months of trade data. The ports strike itself ended late February, so the net export estimate by the BEA will be being made with no “nonstrike” data. We can only guess at what the BEA will estimate. The largely negative story in January gave way to as largely positive one in February, as January’s export declines were matched by a drop in imports in February. The March outcome will likely see both imports and exports rise, but to what overall effect?”
“Our guess is for a net trade balance closer to US$39-40bn than the US$35.4bn in February, but that is not to say that the BEA will share our view. And net export swings can have substantial impacts on overall GDP.”
“The other problem is that the trade data will weigh heavily on the inventory data – another important source of GDP volatility.”
“We can certainly see scope for a negative first print for 1Q15 GDP, though this would not be our base case, with a smaller downside risk to the consensus view looking more probable. Upside surprise is also possible, and from the same sources, though we would imagine its scope to be more limited.”
Key Quotes
“The main sources of forecast error are the usual suspects – net exports and inventories. The ports strike will have dented US exports, and dampened production. But it will also have prevented imports from landing, and whilst that could lead to a backlog of imports in 2Q15, those perishable imports that did not make it, now never will.”
“As usual, the first estimate of GDP is made with only two months of trade data. The ports strike itself ended late February, so the net export estimate by the BEA will be being made with no “nonstrike” data. We can only guess at what the BEA will estimate. The largely negative story in January gave way to as largely positive one in February, as January’s export declines were matched by a drop in imports in February. The March outcome will likely see both imports and exports rise, but to what overall effect?”
“Our guess is for a net trade balance closer to US$39-40bn than the US$35.4bn in February, but that is not to say that the BEA will share our view. And net export swings can have substantial impacts on overall GDP.”
“The other problem is that the trade data will weigh heavily on the inventory data – another important source of GDP volatility.”
“We can certainly see scope for a negative first print for 1Q15 GDP, though this would not be our base case, with a smaller downside risk to the consensus view looking more probable. Upside surprise is also possible, and from the same sources, though we would imagine its scope to be more limited.”