Benzinga
Published Apr 24, 2024 14:49
Updated Apr 24, 2024 16:10
US Economy Expected To Grow 2.5% In Q1: Not 'A Hard Landing And Hardly A Soft One'
Benzinga - by Piero Cingari, Benzinga Staff Writer.
As the week unfolds, investors are eagerly awaiting the impending release of the U.S. gross domestic product growth rate for the first quarter of 2024, set for this Thursday, ahead of the highly anticipated Personal Consumption Expenditure (PCE) price index report – the Fed’s preferred inflation gauge – on Friday.
The U.S. economy showed a robust 3.4% growth rate in the last quarter of 2023, following another spectacular 4.9% growth in the third quarter, according to the final estimates from the Bureau of Economic Analysis.
Q1 2024 GDP: What Do Economists Expect?
Chart: Could The US Economy Continue To Defy Soft-Landing Scenarios?
Goldman Sachs’ Take Goldman Sachs economist Spencer Hill presents a more optimistic view, projecting a 3.1% growth rate. This forecast exceeds the consensus by 0.6 percentage points and edges out the Atlanta Fed's expectations by 0.2 points. Key factors underpinning this upbeat forecast include:
The forecast suggests a 2.4% expansion in Q2, with an average growth rate of 2.5% for the second half of the year.
This outlook is supported by high levels of immigration, robust real personal income growth, and a modest uplift from financial conditions.
Why It Matters For Traders A stronger-than-expected Q1 GDP result may reinforce the perception of a resilient U.S. economy capable of withstanding high interest rates, potentially keeping the Federal Reserve focused on controlling inflation.
This could positively impact the U.S. dollar, while possibly leading to downward pressure on bonds and rate-sensitive sectors like real estate and technology.
Conversely, a GDP figure below expectations might prompt closer examination of how inflationary pressures are impacting consumer spending. This scenario could weaken the dollar, as reduced spending may lessen the likelihood of persistently high interest rates in the future. In such a case, bonds and gold could be positioned for a rally.
In the last advance estimate for Q4 2023 GDP, released on Jan. 25, the U.S. economy expanded by 3.3%, exceeding forecasts of a 2% increase. On that day, the SPDR S&P 500 ETF Trust (NYSE:SPY) saw a 0.5% rise.
Read also: Is The US National Debt Unsustainable? ‘We Can’t Have A Deficit Of 7% Of The GDP’
Photo: Shutterstock
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Read the original article on Benzinga
Written By: Benzinga
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.