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Jul 27 - 11:00 AM
USD: US GDP: 'Definitely Big Numbers But Not Unexpectedly So' - CIBC
First appeared on eFXplus on Jul 27 - 08:52 AM

CIBC Research discusses its reaction to today's US advanced GDP print.

"Growth flowered in the spring, but there were plenty of reasons to think that the US economy can't sustain anywhere near that pace head. The Q2 growth rate of 4.1% matched our forecast on the nose, and was led by very strong consumer spending, and healthy exports as shipments rushed to beat foreign tariffs. That drained inventories, so final sales (GDP excluding inventories) registered a 5.1% advance.

Consumer spending has been helped by tax cuts, but has see-sawed due to a big lift in Q4 from post-hurricane spending, a weak Q1 coming down from that level, and now a 4% bounceback. Capital spending quite healthy if a bit softer than in Q1. Core PCE prices were up 2% annualized over Q1, right in line with the Fed's target. Benchmark revisions included taking Q1 up two ticks to 2.2%.

Overall, these are definitely big numbers, but not unexpectedly so, and should not alter views on the Fed or the second half outlook much (inventories will be rebuilt in Q3, but exports will likely be softer)," CIBC argues. 

CIBC Research/Market Commentary


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