This week, our Chief Investment Officer, Richard Flax, spoke to international media about the latest growth prints from both sides of the pond. Here’s what he had to say on the latest GDP data from the UK and US
US growth beats expectations, but there are concerns…
“The third reading on US first quarter GDP came in at an annualised 1.4% according to revised figures, up from the predicted 1.3%, but lower than Q4 2023’s strong print of 3.4%. This tepid growth continues to highlight concern of a broader economic slowdown.
The increase in real GDP primarily reflected increases in consumer spending, residential fixed investment, non-residential fixed investment, and state and local government spending.
Looking ahead, forecasts suggest a potential rebound in GDP for the second quarter, with estimates pointing to growth rates of 3% or more, similar to the robust performance seen in the latter half of 2023. However, several factors could temper expectations for the rest of the year, including the state of inflation, high interest rates, and the impending presidential election. All these factors may force businesses to adopt a cautious stance on new investments.”
UK growth continues to surprise, albeit slightly sluggishly…
“UK GDP rose to 0.7% month-on-month, slightly up from expectations, and higher than the previous reading which came in at 0.6%. Compared to the same trimester the year before, Britain’s gross domestic product (GDP) rose by 0.3%, coming in higher than expected. Services grew by 0.8 percent with production also seeing a rise of 0.6 percent.
The figures come less than a week before Britons vote in the general election. While the UK does not appear poised to re-enter recession, these figures hardly endorse Prime Minister Rishi Sunak’s claim that the ‘economy has turned a corner. It’s important to note that the recovery is likely to be modest, with the year-on-year figure expected to remain flat. Interest rates remaining at elevated levels will continue to put pressure on household and company spending.”
Richard Flax Richard is the Chief Investment Officer at Moneyfarm. He joined the company in 2016. He is responsible for all aspects of portfolio management and portfolio construction. Prior to joining Moneyfarm, Richard worked in London as an equity analyst and portfolio manager at PIMCO and Goldman Sachs Asset Management, and as a fixed-income analyst at Fleming Asset Management. Richard began his career in finance in the mid-1990s in the global economics team at Morgan Stanley in New York. He has a BA from Cambridge University in History, an MA from Johns Hopkins University in International Relations and Economics, and an MBA from Columbia University Graduate School of Business. He is a CFA charterholder.
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