United States: bad news should be behind us…

If we go through the different GDP components we can observe that the ones that are the softest ones are the most weather sensitive. Indeed, the weather was extremely cold in February (even more than last year – chart 1) which weighed on consumption (chart 2) as well as residential investment (chart 3). In the meantime, households’ saving rate has risen: after having spent a lot of the extra purchasing power freed by lower gasoline price in Q4, households have recently been saving this financial manna (chart 4). The West Coast port strike also seems to have played a role in the recent softness since it has prevented some imported goods to be delivered as well as export goods to be shipped abroad. Moreover, as far as exports are concerned, the strong appreciation of the dollar (+17,7 % over one year - (chart 5&6)) has likely started to dampen exports.

Should we revise down our GDP growth forecast of 2.9 % for 2015 ? We don’t think so.

While the fall in investment in structures related to the oil industry is bound to continue and the impact of the strong appreciation of the dollar on exports has yet to be fully felt, weather conditions have normalized and the West Coast port strike is over.

On top of that, private consumption should be underpinned by the pick-up in job creation (over the last 12 months more than 3 million jobs have been created), by the expected acceleration in wage growth and by favourable wealth effects (thanks to the rise of the stock market as well as the increase in home prices (chart 4)). Residential investment should continue to benefit from the low rate environment. Still, in this context, while the Federal Reserve will likely start raising its target rate in 2015, it is in no hurry and will remain data dependent!

The Macro Team