The first look at Q1 US GDP was largely in line with expectations. The 3.2% annualized pace was slower than the 5.6% of Q4 09, but every one recognized that that pace was not sustainable. Although growth seemed more solid, price pressures eased, further underscoring the lack of price pressures. Despite then the slightly above trend growth for the second consecutive quarter, the Fed remains securely on the sidelines.
Consumption rose 3.6% after a 1.6% advance in Q4. It contributed about 2.5 percentage points to the GDP figure. Inventories added about 1.6%. Business spending on equipment increased 13%, but its spending on structures fell 14%. And for first time in three quarters, house construction fell.