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US growth hits the brakes

Published Thursday, April 30th, 2015

Global equity markets took a tumble yesterday with the curse of weak 1Q US growth striking again as figures revealed that the world’s biggest economy expanded by a measly 0.2% on an annualised basis in the first three month of this year. Bad weather, subdued energy prices and a resurgent dollar were among the factors that were thought to be responsible for putting the brakes on the US economic recovery. Although the disappointing performance fell well below expectations of +1% and was down sharply on the 2.2% in the previous quarter, initial concerns of a slowdown were tempered by hopes of a marked improvement in growth in subsequent quarters as seen in previous years.

This stance was echoed by the Federal Reserve who, in concluding their monthly policy meeting, signalled that patches of economic softness were in their view temporary and expected inflation and the labour market to strengthen in the coming months. Though they did not explicitly discount the possibility of a June rate hike, the mildly dovish tone reinforced broadly held beliefs that rate normalisation would now occur in the third quarter at the earliest.

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Posted by Stephen Brennock

Stephen Brennock joined PVM in 2013 after having worked as a project manager for a business development firm. He graduated with a degree in Business Management in 2007.