The slowdown in first-quarter GDP growth to 1.6% annualised, from 3.4%, was more marked than expected, but it was principally due to a bigger drag from the net exports and inventories categories. With real consumption rebounding strongly toward the end of the quarter, second-quarter GDP growth is on track for a 3.0% gain, suggesting that fears of stagflation are badly misplaced. At the same time, despite the temporary surge in inflation in the first quarter, the fundamentals and the survey-based evidence both point to a resumption of the disinflationary trend soon. The upshot is that we still think a soft landing is the most likely outcome.
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