Expectations of Negative U.S. GDP

Markets are braced for the first negative quarterly U.S. GDP reading in three years, and they should look past it, despite the buying frenzy in the bond market.

Economists expect to see a negative 0.5 percent print for first-quarter GDP, revised from a first reading of 0.1 percent. First-quarter growth was hampered by severe weather though not everyone is convinced that weather was the only factor.

Deutsche Bank’s chief U.S. economist, Joseph LaVorgna, expects to see a decline of 0.8 percent, and he sees weather as the culprit. “That’s predominantly based on less construction spending and less inventory investment,” he said, noting first-quarter GDP could ultimately be revised to a positive number in the third and final reading next month.


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