Growth Turnaround Gaining Momentum

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Special Guest Blogger: Tim Kearney

As late quarter data roll through, it appears that growth momentum is to the upside. First quarter GDP growth is released on April 26th, and the consensus shifted up to 2.2% growth, within a range of 1%-2.9%. Last week the consensus was for 1.8% growth. The Atlanta Fed GDP Now forecast, which was near zero in mid-March, is now above 2%. March retail outperformed expectations. Sales ex-autos, building materials and gas stations were strong. The Leading Economic Index LEI in March increased from the near zero readings at the turn of the year. The YoY growth rate is now 3.1%, well above the annualized 0.7% six-month change, another indication of momentum. The Bloomberg U.S. National Consumer Economic Expectations index 3-month moving average seems to have stabilized at 50. Consumer Comfort index also appears to be stabilizing above the 3-month average. If momentum picks up from the 2% growth expected in the first quarter, then it should be positive for risk assets. Our expectation is that growth can run at 2.5%. It will take some time to work out, but it’s important to note momentum is shifting and supportive of markets.

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