US GDP too weak for FOMC to contemplate raising interest rates any time soon - ANZ

Research Team at ANZ, notes that the US Q2 GDP disappointed rising 1.2% saar vs expectations of a 2.5% gain.

Key Quotes

“The economy grew by 1.0% saar in the first half – below trend and too weak for the FOMC to contemplate raising interest rates any time soon. Real private consumption recovered strongly to rise 4.2% saar, but other key sectors were weak. Gross private domestic investment fell 9.7%. Within that, structures investment fell 7.9% (which includes oil drilling), equipment investment fell 3.5%, and residential investment fell 6.1%.

Some of these data may overstate weakness (ie residential investment), but they point to subdued activity outside of consumption. The GDP price index rose 2.2% vs 0.5% in Q1, and as expected, the core index rose 1.7% (2.1%).

The July Chicago PMI was better than expected at 55.8, and the final July University of Michigan confidence index was at 90.0 vs 89.5. Inflation expectations were also stable (1-yr 2.7%, 5-10 yr 2.6%).”