The incoming data over the past few weeks suggest that activity and employment rebounded in March, as the weather-related distortion that affected the winter months began to unwind. Our latest calculations indicate that first-quarter GDP growth slowed to a modest 1.7% annualised, but that unwinding of the weather distortion means that we anticipate a much stronger 3.5% annualised gain in second-quarter GDP. After that we expect GDP growth to settle down at a still robust 3.0% annualised pace in the second half of the year, as the fiscal drag continues to fade and the Fed errs on the side of providing too much rather than too little monetary accommodation.
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