United States

The US economy was slow out of the gates in 2018, recording GDP growth of only 2.0% on a quarter‐on‐quarter annualized basis in Q1. The softness was primarily driven by weaker consumer spending (up 1.0%), though business investment grew at its fastest pace since 2014, up 10.4%. This kept momentum quite solid, with real GDP up by 2.8% year‐on‐year in the first quarter.     

United States

Real GDP growth slowed to an annualised rate of 1.4% in Q1 2017 from 2.1% in Q4 2016. Growth in Q1 was constrained by weak consumer spending and inventories, while residential and business investment rose strongly. But, we believe this lull will be short‐lived and forecast a rebound in GDP growth to around 3.0% in Q2. The factors that constrained consumer spending, including higher inflation, unusually warm weather and slower tax refunds, were not repeated in Q2.     

United States

Annualised real GDP growth came in at −0.2% in Q1. Final sales fell 0.6% and inventories added 0.5 percentage point (pp) to growth in the first quarter. Consumer spending rose 2.1% and contributed 1.4 percentage points to GDP growth. Business investment fell 2.0% on a massive 18% plunge in non‐residential structures, while net foreign trade and government spending exerted 1.9 and 0.1 pp drags on growth respectively. The soft Q1 has led us to revise down our 2015 GDP growth forecast from 2.7% in April to 2.3% now. We expect the US economy to grow by 2.8% in 2016.…     

Japan

Growth continues to struggle against an uncertain external outlook and weak domestic demand. While GDP in most of 2019 was supported by a pick-up in consumption spending ahead of last October's consumption tax hike, weak October and November data highlighted the possibility of a larger than expected fall in growth in Q4 2019. We expect GDP growth to slow to 0.3% in 2020 (after an estimated 1.0% in 2019), held back by a higher consumption tax, weak wage growth, and sluggish trade. That said, the 2020 Tokyo Olympics should provide modest support to spending and tourism. In 2021, we expect GDP to grow 0.8%.     

United States

Annualised real GDP growth was revised to a staggering 5% in Q3 2014, the strongest reading since 2003, as final sales advanced 5% while inventories were neutral for growth. Consumer spending growth was revised up from 2.2% to 3.2%, mostly on stronger services spending, while business investment grew by 8.9%. Net foreign trade was a significant positive factor driving GDP growth in Q3, contributing 0.8 ppt, while government spending was revised up modestly to 4.4%. We expect the economy to have grown by around 3% in Q4, resulting in GDP growth of 2.4% in 2014 overall, with a 3.3% expansion forecast for 2015…     

Forecast Overview

The national accounts for Q4 2016 reported quarterly GDP growth of 0.7%, up from 0.5% in Q3, as much better performances from the production and construction sectors more than offset a slightly softer outturn for services. The expenditure data showed virtually all of the growth coming from consumer spending, although there was also a stronger performance from net trade once allowance had been made for the volatility caused by sales of non‐monetary gold.     

Japan

Growth is set to struggle this year against a background of weak exports and a cyclical deceleration in capex spending. Weak demand from Asia (particularly China) and a slowdown in IT continue to cloud the external outlook. Sluggish industrial production and a loss of momentum in business investment will weigh on growth in 2019. We now expect real GDP to register a slight decline in Q1. For 2019, we forecast GDP to grow only 0.5% (down from 1.0% previously) before slowing to 0.4% in 2020 due to the consumption tax hike in Q4.     

Japan

Monthly data suggest that GDP growth remained solid in Q3. Industrial production increased 2.1% on the month in August, more than reversing the 0.8% decline in July. Goods export volumes also rose strongly, growing nearly 9% y/y in July‐August combined, while the latest Tankan survey showed a rise in capital spending intentions. And although the BoJ's real consumption activity index suggests that growth in household spending moderated in Q3, this followed a very robust outturn in the previous quarter.     

United States

Real GDP rose by 2.2% on an annualized basis in Q4 2014, as final sales advanced 2.4% while inventories imposed a 0.1 percentage point drag on growth. Consumer spending grew by 4.4% – the strongest since 2006 – contributing 3.0 percentage points to GDP growth. Business investment growth was revised slightly lower to a still solid 4.7% on downward revisions to equipment and intellectual property spending. Lastly, net foreign trade and government spending were drags on growth, subtracting 1.0 and 0.4 percentage points respectively. The economy grew by 2.4% in 2014 and we expect GDP growth will accelerate to 2.7% in 2015.…     

United States

Real GDP grew at a slower 2.2% annualized pace in Q4 2018, marking a substantial slowdown from 4.2% in Q2 and 3.4% in Q3. While consumer spending cooled to 2.5% growth, business investment picked up to 5.4% and residential investment remained depressed with a 3.5% contraction in Q4. Net trade exerted a 0.1 ppt drag on growth in Q4, offsetting the contribution from inventories.     

Japan

The final Q2 GDP growth estimate was revised up slightly to 0.2% quarter‐on‐quarter. This was slightly higher than the initial estimate of zero but it still represents a slowdown from the 0.5% growth in Q1. Household spending held up better than projected. Private residential investment also surprised on the upside, surging 5% in the quarter, while public spending made another solid contribution to GDP growth. However, export volumes fell 1.5% on the quarter, with both goods and service exports falling.     

United States

Real GDP grew at a robust 3.4% annualized rate in Q3 2018, following even stronger 4.2% annualized growth in Q2. A strong gain in consumer spending was partially offset by the weakest increase in business investment in nearly two years and a third straight quarterly decline in residential investment. In a reversal from Q2, net trade exerted a 2.0 ppt drag in Q3. Real GDP is now trending at a very solid 3.0% y/y – the fastest pace since early 2015.     

United States

The US economy suffered its worst quarter since the Great Recession in Q1 with real GDP falling 2.9% on an annualized basis. The main downward revision to activity came from lower consumer spending on services with the previously estimated advance of 4.3% being revised down to only a 1.5% gain. Newly available data from the Census Bureau's quarterly services survey indicated a much smaller contribution to growth for the sector from 1.9 percentage points to 0.7 percentage points. Housing and business investment fared poorly while net trade imposed a sharp drag on growth…     

Japan

GDP likely contracted very sharply in Q2 2020 as household and business spending fell amid the state of emergency in effect from April to May. While we expect growth to bounce back in Q3 as activity and spending regain lost ground, the subsequent recovery will likely be very gradual as external demand stays weak and concerns over the virus linger. A renewed pick-up in infections and a return to restrictions on activity are downside risks. We forecast GDP to shrink 6% in 2020, before growing 2.8% in 2021.     

United States

Annualised real GDP growth was revised up from 2.4% to a final reading of 2.6% in Q4 2013. The growth mix was more positive than initially estimated with final sales posting a solid 2.7% advance and inventories neutral for growth. Consumer spending and business investment trends remain favourable, while the government spending drag was offset by a boost to growth from net trade…     

United States

Real GDP growth cooled to 2.0% (annualised) in Q2, following a deceptively strong 3.1% advance in Q1, but the softer headline print masked diverging trends across subsectors. The 4.7% consumer spending splurge was the largest in almost five years. Meanwhile, residential and business investment contracted – the latter for the first time since 2016. But trade and inventories also dragged on growth by 0.7ppt and 0.9ppt, respectively.     

United States

Despite a slight downgrade to GDP growth in Q1 and much slower growth expected in Q2 (reflecting the sequester and higher taxes) the recovery appears set to accelerate in the second half of the year. There are encouraging signs that private demand is picking up, with employment growth, consumer confidence and the housing market continuing to strengthen. This will push GDP growth to over 3% by the end of the year and to an average of 2.9% in 2014. The key factors strengthening growth in the face of tigher fiscal policy are: Improving household finances – Consumer spending is being bolstered by wealth effects from strong equity and house prices. Real wages are showing healthy growth again and, combined with rising employment, are helping to mitigate the impact of higher taxes on household disposable income. Moreover, with debt ratios at their lowest levels since 2004, it looks like deleveraging by households is ending. A stronger housing market – housing starts were up 6.8% in May to a level nearly 30% up on a year earlier. We expect residential investment to increase over 13% in 2013 and a further 9% in 2014 despite recent increases in mortgage rates. Increased home sales will also boost spending on furniture and appliances, which are often bought when people move home. Competitive manufacturing sector – US unit labor costs are the most competitive in over 30 years, and many firms are also benefiting from relatively low natural gas prices. This is supporting exports in the face of subdued world demand, although the trade deficit has deteriorated as stronger domestic demand has lifted imports. Improved competitiveness is also encouraging higher investment, which is back to pre‐recession levels…     

United States

The unique feature of the global coronavirus recession is its speed. Economic conditions are evolving at such a rapid pace that the final Q1 GDP report now seems very stale. The 5% annualised contraction – the worst drop since 2008 – confirmed the onset of the GCR, with consumer spending and business investment falling 6.8% and 6.4% respectively. We estimate a plunge of 30% in Q2 GDP, driven by a collapse in consumer outlays, severely constrained business activity and stalled trade flows. The peak-to-trough decline in GDP should be around 10% – 2.5 times as bad as the financial crisis.     

Forecast Overview

We have revised up our forecasts for GDP growth in 2015 and 2016 to 3% and 2.8% respectively, from 2.7% and 2.5% three months ago. This follows the plunge in the oil price, which will push inflation sharply lower and boost household spending power. It is unlikely that the MPC will consider raising interest rates while inflation is very low, so we have also pushed back our forecast for the first rate hike from Q3 2015 to Q1 2016…     

United States

Annualized real GDP growth was revised up to 1.4% in Q2, faster than the 0.8% in Q1 but still constrained by headwinds from weak business investment and net trade and a large inventory run‐down. We believe that economic activity accelerated in Q3, with GDP growth around 2.5%, but momentum remains modest.