Preliminary GDP data released today show that the U.S. economy remained stagnant in the first quarter, growing by the same pace as the previous. Q1 GDP grew at an annualized rate of 1.8 percent much lower than economists had predicted at 2.1 percent.
GDP Sales Preliminary data grew by only 0.6 percent below expected 1.0 percent, and down from the previous 0.8 percent. Additionally, PCE Price Index (Personal Consumption Expenditure) remained unchanged at 3.8, indicating that consumer spending has slowed.
“Consumer spending was pretty anemic last quarter, and households are likely to be somewhat restrained going forward,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia.
Corporate profits contracted by 0.9 percent in the first quarter versus a growth of 3.8 in the previous, and much lower than the forecast 2.3 percent growth for Q1.
The GDP data paint a bleak future for the U.S. economy, especially when employment data also released today show more Americans filed applications for unemployment benefits week. Initial jobless claims increased by 10,000 to 424,000 in the week ended May 21, according to data from the U.S. Department of Labour, from a prior revised 414,000, higher than the expected 400,000. The labour market appears to be struggling to gain momentum, in a sluggish economy.
After release of the news, the U.S. Dollar weakened against most majors. USDJPY dropped 65 pips from 81.79 to 81.14. USDCHF dropped 57 pips from 0.8707 to 0.8649. EURUSD rose 35 pips from 1.4170 to 1.4205