Looking Beyond GDP Figures, What are Markets Saying?
There is much debate about the direction of the U.S. economy these days with nervousness over trade tensions, credit accumulations, Federal Reserve policy and more. All add up to variables that can put the brakes on business expansion. With all that in mind, I wanted to take a step back this week to look at a few other economies and dig deeper into the numbers.
In the United States, gross domestic product (GDP) famously came in at 3.2 percent for the first quarter, but that number reflected the build-up of inventories and an unexpected improvement in the trade balance, factors that are expected to reverse in the future. Notably, trade improvement resulted from a drop in imports, even as import prices fell. Other countries mirror similar economic activity. In Japan, first quarter GDP came in stronger than expected partly due to improvements in net exports.
This boost to net exports was due to weak domestic demand causing imports to drop more than exports. Additionally the usual drivers of the economy — exports, capital spending and private consumption — all declined during the quarter, with exports tumbling 2.4 percent, the most since 2015. In the United Kingdom, GDP rose on stockpiling of goods in anticipation of economic uncertainty due to Brexit.
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