US GDP Preview: Forecasts from eight major banks, reading to be soft for Q1

The rate of US economic growth is expected to mark a slowdown from 6.9% annualized expansion to a mere 1% in Q1.

Westpac

“The US economy experienced a dramatic deceleration in Q1 2022, with annualised growth slowing from 6.9% to 1.5% on our forecast – or to 1.0% as expected by the market. The slowdown is the consequence of a large negative contribution from trade, with exports soft and imports strong over the three months to March, as well as a significant reduction in the pace of inventory accrual over the period. Through mid–2022, growth will bounce back. However, each quarter that passes will see support from income growth slow; any remaining fiscal cash spent; tighter financial conditions bite. So into end-2022, we expect growth to slow towards trend and, come 2023, for it to fall below that mark.”

Commerzbank

“Growth probably slowed to 0.8% (annualized rate versus previous quarter) in Q1. However, this masks the fact that private consumption and investment increased significantly. However, inventory accumulation has eased and imports have increased strongly.”

ING

“1Q GDP data is expected to show the economy expanded at a 1-1.5% annualised rate, which would mark quite a deceleration from 4Q 2021s 6.9% rate, reflecting the Omicron wave of the pandemic that impacted people movement quite considerably. However, recent data has pointed to a renewed uptick in activity and we expect to see stronger GDP growth for the second quarter.”

TDS

“Real GDP likely slowed sharply in Q1 following a significant increase to 6.9% AR in Q4 from 2.3% in Q3. We look for real GDP growth to have slowed sharply to 0.5% QoQ AR following the significant increase to 6.9% AR in Q4..”

RBC Economics

“We expect a 1.5% increase in US Q1 GDP – down from 6.9% in Q4 2021. Consumer spending is tracking a 4% increase and business equipment investment likely jumped higher. But a surge in imports and falling exports will leave net trade as a large subtraction.”

SocGen

“Q1 GDP growth is likely to be modest. We forecast 0.7% SAAR, which does not address concerns. The meager growth rate is more the outcome of inventory timing than any change in demand.”

NBF

“The pace of the recovery likely decelerated in the quarter as the level of production moved closer to potential. Positive contributions are nonetheless expected from consumption spending, business investment in machinery and equipment as well as residential investment. Trade and inventories, on the other hand, might have weighed heavily on growth. Our call is for a 0.9% annualized expansion.”

CIBC

“With Omicron stifling the movement of US goods abroad and domestic inventory replenishment, growth in the US economy likely decelerated to 1.8% annualized in the first quarter. The headline growth rate would mask an acceleration in consumption, with contributions from both goods and service sectors, as auto unit sales rose and spending on food and travel services gained momentum as Omicron faded. Residential investment also likely boosted growth, as housing starts and construction spending climbed, while progress in capital goods imports and domestic shipments of such goods suggests a lift from capital spending. Excluding inventories, real final sales likely grew by a more robust 3½% annualized. Were above the consensus forecast, but likely not be enough to cause a material market reaction.”