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15 Mar 2013
Forex Flash: US Q1 growth but drag expected in Q2 & 3 - Nomura
FXstreet.com (Barcelona) - Nomura economists note that Recent data point to stronger growth in Q1, but slower government spending adds to fiscal drag in Q2 and Q3.
They write, “Incoming data points to faster growth in the first quarter than we had expected. The need to replenish inventories and an apparent delay in households’ adjustment to higher tax burdens at the start of the year has lifted current quarter growth tracking to an annual rate of 2.5%. However, it now appears that the 1 March spending cuts (sequester) will be in place at least till the end of September. These new cuts in spending will slow growth in Q2 and Q3 (previously we had assumed that only half of these cuts would be implemented.)”
They write, “Incoming data points to faster growth in the first quarter than we had expected. The need to replenish inventories and an apparent delay in households’ adjustment to higher tax burdens at the start of the year has lifted current quarter growth tracking to an annual rate of 2.5%. However, it now appears that the 1 March spending cuts (sequester) will be in place at least till the end of September. These new cuts in spending will slow growth in Q2 and Q3 (previously we had assumed that only half of these cuts would be implemented.)”