Q1 GDP rose by 1.1% q/o/q annualized and at least with the final Atlanta Fed’s GDPNow estimate they nailed it. Personal spending, the biggest component as we know, was up 3.7% vs the forecast of 4%. That added 248 bps to GDP with spending on autos and services leading the way. Gross private investment was a drag of 234 bps with a drop in inventories being the main reason. Spending on equipment was down while slightly up for spending on IP. Residential construction not surprisingly was lower too and taking off almost 20 bps from GDP after more than 100 bps in the two prior quarters. Spending on ‘structures’ added 29 bps. Trade was almost neutral to GDP, adding 11 bps. Government spending added 81 bps with both federal and state/local contributing with their spending. Taking out the influence of inventories and trade saw final sales to private domestic purchasers up by 2.9%. Core PCE was up 4.9% q/o/q annualized vs 4.4% in Q4 and 2 tenths more than forecasted.
Bottom line, if only we can get a GDP read month by month because I’m pretty confident that the quarter ended weaker than it began. There were two parts to Q1, pre SVB and post SVB and the post side will be much more felt in Q2 and thru the rest of the year. As night follows day, a recession follows an expansion and it is why that while EVERYONE supposedly is expecting a recession, EVERYONE can be right as it will turn dark tonight after the light of day. The REAL question is what the extent and length will be of the recession. That is where the true differences of opinions lie. Finally, I will highlight AGAIN that each month that passes by, there is debt that is repricing at a much higher interest rate than the loan that is maturing, for both businesses and households and that will be a continued drag on economic activity as the quarters go by that will only pick up pace as more get impacted.
Initial jobless claims fell to 230k from 246k and much lower than the estimate of 248k. The 4 week average fell to 236k from 240k. After jumping to the highest level since last November, continuing claims fell by 3k w/o/w to 1.858mm.
Bottom line, notwithstanding the welcome drop in claims this past week, the revisions seen last month set a new floor under claims and we’ve seen a rising trajectory. Reflecting this even more so is continuing claims that are at 5 month highs.
4 Week Avg Initial Claims
Continuing Claims
END
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor. Each day The Boock Report provides summaries and commentary on the macro data and news that matter, with analysis of what it all means and how it fits together.