On Friday, Q2 GDP data is due. Analysts at Wells Fargo, expect to see the first sub-2% growth rate in two years. According to them, a key swing factor is that private inventories, likely build at a slower pace and pull GDP growth lower.
Key Quotes:
“The rate at which businesses add-to or draw-down inventories factors into GDP. It’s a question of current quarter change compared to prior quarter change, making it notoriously difficult to forecast private inventories, especially since inventories are subject to large revisions. On Friday when we get our first look at Q2 GDP, we expect to see that the economy grew at a 1.8% annualized pace and that inventories were a decent size drag on headline growth.”
“Our baseline assumption is that inventories will slow to an $82 billion build in the second quarter, resulting in a 0.9 percentage points drag on GDP growth. A larger slowdown, say just a $74 billion build, could drag GDP down a full percentage point. Conversely, a greater-than-expected build will create a more muted impact and a smaller drag on overall growth.”
“In order for inventories to have no impact on headline GDP, we would need to see a build of $123 billion, yet inventories have not grown by more than $100 billion in consecutive quarters since 2015.”
“The fundamentals signal that private inventories will likely build at a slower pace and pull GDP growth lower in the second quarter. Barring a massive surge of $123 billion or more, the question isn’t if inventories will be a drag, but by how much.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
Gold trades near record-high, stays within a touching distance of $3,100
Gold clings to daily gains and trades near the record-high it set above $3,080 earlier in the day. Although the data from the US showed that core PCE inflation rose at a stronger pace than expected in February, it failed to boost the USD.
EUR/USD turns positive above 1.0800
The loss of momentum in the US Dollar allows some recovery in the risk-associated universe on Friday, encouraging EUR/USD to regain the 1.0800 barrier and beyond, or daily tops.
GBP/USD picks up pace and retests 1.2960
GBP/USD now capitalises on the Greenback's knee-jerk and advances to the area of daily peaks in the 1.2960-1.2970 band, helped at the same time by auspicious results from UK Retail Sales.
Donald Trump’s tariff policies set to increase market uncertainty and risk-off sentiment
US President Donald Trump’s tariff policies are expected to escalate market uncertainty and risk-off sentiment, with the Kobeissi Letter’s post on X this week cautioning that while markets may view the April 2 tariffs as the "end of uncertainty," it anticipates increased volatility.
US: Trump's 'Liberation day' – What to expect?
Trump has so far enacted tariff changes that have lifted the trade-weighted average tariff rate on all US imports by around 5.5-6.0%-points. While re-rerouting of trade will decrease the effectiveness of tariffs over time, the current level is already close to the highest since the second world war.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.