US Q1 GDP..big picture concerns conflate with shorter term weakness!

The big picture is the risk that growth may well have peaked in the current cycle:

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And personal consumption expenditure flows (population adjusted) have arced in a worrying sign of secular decline for some time:

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GDP growth less private employment growth has been negative since Q4 2010, one of the very few such periods in the post war period and the weakest to date and symptomatic of weak productivity and wage growth:

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Preliminary US GDP grew by a real $22bn in the first quarter.  Given that we are unlikely to see the weather related bounce back in growth that we saw last year, we are left wondering where growth is going to come from in the second and third quarters, especially if global trade fundamentals remain weak.

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Personal consumption expenditures remained a vital source of growth rising at a level in excess of real GDP growth in Q1.

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But PCE growth has been losing steam and during 2014/2015 GDP has been dependent on Q2/Q3 PCE strength. 

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And a sizeable element of personal consumption expenditure is drawn from imputed expenditures.  Since 2012 market based PCE has been growing at a faster rate at the same time as PCE has been growing at a slower rate:image

A key driver of consumer expenditure and economic growth has been motor vehicles and parts, but this has been declining for two successive quarters.  MVP demand and production may well have peaked!

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Private domestic non residential investment has also been negative for the last 2 quarters:

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And inventories which remain at high levels have detracted from growth for three successive quarters:

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Inventory dynamics are still fairly negative in terms of their ability to transmit a  growth shock to the economy:

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Net exports have also detracted for some time:

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Indeed, export growth was an important requirement for the rebalancing of growth away from domestic debt financed consumption:

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And as noted in a previous post, household debt relative to GDP and income growth is highly divergent and continues to place GDP growth under sizeable constraints in the absence the type of wage growth we have historically seen in the upsides of cycles:

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And import growth has been on the slide too:

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Indeed without housing and utilities, personal consumption expenditure and with it GDP growth would have been close to zero:

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Health care expenditure has been especially important:

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What else do we see?  Some pretty big picture items:

Net domestic investment of private business have yet to show the type of growth needed to sustain higher GDP growth:

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And some other notable long term graphs:

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