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NAFCU economist: GDP growth 'solid'; still expects Q3 rate cut
According to the Commerce Department's final estimate for the first-quarter, the U.S. economy grew 3.1 percent – growth which NAFCU Chief Economist and Vice President of Research Curt Long called "solid" but predicted a downturn in a NAFCU Macro Data Flash report.
"Despite the solid headline figure, weak consumer spending during the quarter is concerning," said Long. "It is unlikely that segments like inventory accumulation and trade will continue to buoy GDP as they did in the first quarter. "On the bright side, retail spending has picked up a bit in the current quarter and should remain strong enough to ward off a recession this year.
"The Commerce Department's measure of inflation was revised up, but it remains well below the Fed's target. NAFCU continues to expect a rate cut from the Fed in the third quarter," Long added.
During last week's Annual Conference, Long addressed economic trends – including the possibility of a recession – with CUbroadcast's Mike Lawson. Watch his interview here.
Contributions to growth of real GDP came from gains in consumption spending (+0.94 percent), business investment (+0.53 percent), inventory accumulation (+0.55 percent) and government spending (+0.49 percent). Residential investment reduced growth 0.08 percent.
PCE inflation, the Fed's preferred inflation metric, decreased from 1.5 percent in the fourth quarter to an upwardly revised 0.5 percent in the first quarter. However, core PCE inflation – excluding food and energy – decreased to 1.2 percent.