We still firmly believe that the weakness of first-quarter GDP was principally due to the unseasonably severe winter, the meltdown in the shale oil industry and possibly some seasonal quirks too. In theory, all of those transitory factors should fade soon, with second-quarter GDP growth rebounding sharply. Nevertheless, it is important to acknowledge that the incoming data for April have been mixed. In particular, underlying retail sales actually contracted slightly last month, leaving them even further below trend. The longer it takes for the rebound to show up in the data, the longer it will be before the Fed begins to raise its policy rate. Right now the most likely lift-off date is probably September.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services