Today's 1st quarter US GDP report came in much lower than consensus estimates were forecasting and were much lower than we were expecting even though we thought estimates were too high (see US GDP Likely To Disappoint). 1Q14 GDP was barely positive at 0.1% QoQ annualized rate. Consensus estimates were expecting something closer to 1.1% QoQ AR. The cold weather in the first quarter obviously played a very large part in the weak GDP print and most commentary surrounding the release is that we should have a strong snap back quarter in the 2nd Quarter as well as the latter half of the year. While we agree that this will most likely happen (and the 1st quarter GDP could be revised higher in later releases), we think it will be very difficult for US GDP to meet growth expectations for 2014.
Using Consensus Economics data, which asks the world's leading economists for forecasts on a variety of economic data points, US GDP is expected to grow by 2.8% in 2014. This means that the US would have to average about 3.7% annualized growth for the next three quarters after today's dismal 1st quarter print. Considering that we have only had 5 quarters since 2007 where we have met or exceeded the 3.7% threshold, we think that GDP estimates are once again too lofty for the United States.