Spending is expected to be less positive, but still to post an increase, from growth of 0.1 percent to 0.2 percent, driven largely by declines in motor vehicle sales and in utility spending. The trend of income rising faster than spending should continue to both slow current growth and make the growth we do get more secure—brightening the prospects for future sustainable growth. For the moment, however, the expected results suggest more of the same.
GDP growth expected to drop. The economic slowdown we've seen this year is expected to be confirmed on Thursday, with the release of the first estimate of gross domestic product for the first quarter. Growth is expected to have declined from 1.4 percent to 0.7 percent on an annualized quarterly basis, held back by slower consumption growth and weak trade performance, as exports dropped by around 2 percent while imports grew by 5 percent on an annualized basis.
On the positive side, it's expected that investment continued to grow and government spending contributed to growth as well. Keep in mind that this is a backward-looking indicator, incorporating data we already knew, and growth is expected to accelerate in the remainder of the year.
Fed not expected to act. The last event to watch is the April meeting of the Federal Open Market Committee, which sets interest rates. Although there is a possibility of an interest rate increase, neither the markets nor the commentators are expecting one. The key question will be whether or not the meeting minutes signal that a rate increase is likely in June. With international risks receding, June may be back in play; if so, the minutes should give a hint of that.
Have a great week!
Brad McMillan is the chief investment officer at Commonwealth Financial Network, the nation’s largest privately held independent broker/dealer-RIA. He is the primary spokesperson for Commonwealth’s investment divisions. This post originally appeared on The Independent Market Observer, a daily blog authored by McMillan.