Chart of the week

U.S. GDP: The conundrum of the first-quarter weakness

Markets are waiting for the release of Q1 gross domestic product (GDP) data. Especially the U.S. figures will be scrutinized for hints whether the surge in optimism after the presidential election translates into a pickup in real activity. We are skeptical that we will already see a positive surprise for Q1. Several “hard” indicators, like industrial production, are picking up, but nowhere near as strongly as various sentiment surveys. Moreover, the U.S. economy has shown a pronounced seasonal pattern for quite some time. The first quarter report has tended to be significantly weaker than the average of the whole year, as our chart of the week demonstrates. On average, Q1 has underperformed the overall annual GDP figure by more than 1 ppt in the U.S. for the past 10 years. Q1/2017 data is due to be released in late April. Deutsche Asset Management’s U.S. Chief Economist Josh Feinman projects a 1.50% reading, hence once again weaker than our expectation for the whole year. Stay tuned!