US Q2 GDP – 27/07
one of the key themes this week has been the resilience of the US economy, despite the sharp rise in rates over the last 12 months. Notably the resilience of the labour market has surprised with little sign of a slowdown on hiring, while inflation has been slowing quite sharply.
This has helped consumers stay resilient with a solid rebound in personal consumption in Q1 to 4.2% after a weak end to last year. This rebound in consumer spending helped Q1 GDP get revised up from 1.2% to 2% in the final revision of Q1 GDP.
The key test in this week's first iteration of US Q2 GDP will be whether this momentum was maintained. Judging by recent consumer confidence numbers, spending patterns and a resilient labour market there is little reason to suppose otherwise, although manufacturing is likely to be a weak spot. It's also worth keeping an eye on inventories to see whether these are being maintained, or being run down.
