U.S. Outlook: Behind the Q1 GDP headlines, and what it means for Q2

Scott Anderson
Posted by Scott Anderson
Chief Economist

We were bracing for a soft Q1 GDP print this morning, primarily due to a sharp slowdown in real consumer spending in the first quarter.

Crowds of shoppers walking in a mall, focusing on their walking legs.We got the drop we forecast, as real consumer spending growth slumped to 1.1% from a 4.0% annualized growth rate in Q4.

For more on this, see highlights of my report below, followed by a link to the full U.S. Outlook, delivered on April 27.

Key observations:
  • The decline in consumer spending was driven by a 3.3% decline in durable goods spending, primarily motor vehicles.
  • Business equipment spending also came out on the weak side.
  • We expect the drop in real consumer spending growth in Q1 to be partially reversed in the second quarter as recharged savings, pent-up demand, and lower credit card balances entice consumers to spend more freely.
  • Our forecast for Q2 GDP growth improved to 3.0% from 2.6% prior to today’s release.

Read my full report.

Reminder: All comments are moderated prior to publication and must follow our Community Guidelines.

Submit an Idea

[contact-form-7 id="32" title="Share An Idea"]

You are leaving the Bank of the West Blog. Please be aware: The website you are about to enter is not operated by Bank of the West. Bank of the West does not endorse the content of this website and makes no warranty as to the accuracy of content or functionality of this website. The privacy and security policies of the site may differ from those practiced by Bank of the West. To proceed to this website, click OK, or hit Cancel to remain on the Bank of the West Blog.