by Bill McBride on 6/08/2015 09:54:00 AM
Monday, June 08, 2015
Some excerpts from two research reports ...
From Merrill Lynch: To everything, there is a season
After a dismal start to the new year, we think that the worst is behind us. At its low, our tracking model for 1Q GDP pegged growth at -1.2%; now it is tracking -0.2%. The low for 2Q was 2.3%; now it is tracking 2.9%. On a similar note, key monthly data releases have shifted from negative to neutral. On a negative note, both core retail sales and manufacturing output were flat in April; on a positive note, the latest housing starts and auto sales data were strong and the labor market continues to motor along, with 200,000-plus job gains and a modest pick-up in wage growth.From Goldman Sachs: After the Pothole
We view the recent turnaround in the US economic data as further confirmation that weak Q1 GDP growth was largely a result of temporary factors and statistical distortions with little bearing on the outlook for the rest of the year. Once again, the US economy seems to be climbing out of a Q1 pothole.Based on recent data, Q1 GDP will probably be revised up with the next release. And it looks like there will be a bounce back in Q2 (although the Atlanta Fed GDPNow model is only tracking 1.1% for Q2.
We continue to expect strong growth for the remainder of 2015. We are currently tracking Q2 GDP growth at 2.7% and expect a slight acceleration to 3% in 2015H2. We expect a pick-up in consumer spending to provide the largest contribution to stronger growth over the remainder of this year. Consumption grew a puzzlingly soft 1.8% in 2015Q1 despite strong disposable income growth and high consumer confidence. While many have expressed concern about softer spending in recent months, it is worth recalling that consumption has risen a respectable 2.7% over the last year ... We expect a rebound in coming quarters as the 1 percentage point (pp) increase in the saving rate seen over the last six months reverses.
Posted by Bill McBride on 6/08/2015 09:54:00 AM