US: Data revisions and seasonality elevate downside risks to Q1 output – Deutsche Bank

Research Team at Deutsche Bank, suggests that the US economic output was revised up last quarter mainly because of higher-than-previously-reported stockpiling. 

Key Quotes

“Net exports were also revised up modestly. The effect was to push the second snapshot of Q4 2015 real GDP growth up to 1.0% from its initial 0.7% reading. Over the last four quarters, real GDP has increased a modest 1.9%. While there will be two more revisions to Q4 output this year, the mix in growth points to a further slowing in economic activity this quarter. 

Will residual seasonality weigh on Q1 growth once more? Over the past six years GDP growth has on average been considerably weaker in Q1 than in the remaining quarters of the year. Although the Bureau of Economic Analysis (BEA) investigated residual seasonality issues in the GDP data during its annual revision last July, our analysis suggests that residual seasonality has been rising steadily for over a decade and is large by historical standards. In addition to the bleak near-term outlook for the manufacturing and traded goods sectors, the possibility of residual seasonality is another reason we are expecting a well-below-consensus print of 0.5% GDP growth this quarter.”