US: Appetite to spend fuels 2Q GDP growth – ING

James Knightley, chief international economist at ING, notes that the US GDP growth slowed in 2Q19 to 2.1% annualised from the 3.1% rate seen in 1Q19, but it was at least above the 1.8% consensus estimate.

Key Quotes

“The underlying story is better than the headline suggests given the huge swings in the inventory and the net trade components. Strip this out and we find real final sales to domestic purchasers grew an impressive 3.5%, which hardly suggests a desperate need for aggressive monetary policy stimulus.”

“In the second quarter net trade subtracted 0.65 percentage points from headline GDP after having contributed +0.73 percentage points in 1Q. Much of this was also due to weakness in headline exports, which underlines the legitimate concerns about global demand.”

“A strong jobs market, rising wages and asset prices and falling gasoline prices mean households had the confidence and the cashflow to spend.”