US GDP Misses With 0.7% – USD Ignores
The US economy grew by 0.7% in Q1 2017 on an annualized level. This is below official expectations but perhaps above the “whisper numbers” especially after yesterday’s mediocre durable goods orders.
The dollar is not really sure how to react.
The US was expected to report a growth rate of only 1.3% annualized in Q1 2017, down from 2.1% in Q4 2016 and after a mediocre 2016 that saw sub 2% growth.
The US dollar was on the back foot ahead of the publication.
Follow the live coverage with Valeria Bednarik, Mauricio Carrillo and myself: Scroll down for background information.
Q1 GDP background – hard vs. soft data
Early indications for the first quarter looked worse than the 1.3% projected by economists. The Atlanta Fed’s Nowcast was revised down throughout the quarter, with the latest update showing a meager 0.2% annualized rate, or under 0.1% q/q.
Retail sales, durable goods orders and other measures of “hard data” fell short of expectations. The most recent bulk release was quite poor. Hard data is actual economic activity seen in the past.
The soft data painted a different picture. Consumer and business surveys reflected optimism. Optimism and confidence tend to translate into future consumption and investment. Usually, hard and soft data go hand in hand, but not this time. Divergence has been massive.
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