A string of disappointing monthly reports set us up for a weak Q1 GDP print, so today's news was more of a yawner for financial markets. The headline growth rate of 0.5% was only a hair under expectations, with consumer spending at 1.9% offset by a further weakening in business investment spending, a drag from trade, and a third consecutive quarter in which inventory building slowed. Excluding inventories, final demand was still no barnburner at 0.9%.
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Core PCE prices were rising at a 2.1% annualized pace in the quarter, the hottest in many quarters.
Looking ahead, a statistical quirk that appears to be weighing on Q1 results even after seasonal adjustment, the strong gains in jobs that are boosting household income, and a now lower pace of inventory building, all point to a much better Q2. But for today, there's not much for markets to react to in a broadly on consensus report.
