• US GDP growth was even worse than initially though in Q1 according to the latest estimate, dropping at a 1.5% annualised pace. 
• Markets did not react to the latest US GDP data. 

According to a second estimate by the US Bureau of Economic Analysis, the annualised pace of real GDP growth in Q1 2022 came in at -1.5%, below the first estimate of -1.4% and the market's expectation for a growth rate of -1.3%, data on Thursday showed. Nonetheless, the latest GDP estimate still showed healthy growth in consumer spending of 3.1% in Q1 (on an annualised basis) versus the prior estimate of 2.7%, plus robust business investment growth of 9.2% (unchanged from the first estimate. 

The data also still showed that the drop in GDP is largely explained by trade dynamics, with US exports in Q1 dropping at an annualised pace of 5.4% (versus the prior estimate of 5.9%), while imports rose by 18.3% (versus the prior estimate of 17.7%). A deterioration in the trade balance, as suggested by these figures, suggests that the economic activity being conducted to satisfy domestic consumption is being shifted abroad. 

In terms of Q1 inflationary measures; the second estimate of the GDP deflator was raised to 8.1% versus the first estimate of 8.0%. Meanwhile, the PCE Price Index showed inflationary pressures up 6.3% YoY in Q1, in line with the first estimate.  

Market Reaction

Markets did not react much to the latest US GDP figures, despite the miss on expectations on the headline growth number.