Final Q1 GDP -1.6%; What’s in store for Q2?

Wednesday, June 29, 2022

This morning’s economic data comes in the form of a revision First Quarter Gross Domestic Product (GDP) digits, which is the final reading. In the headline, we see this increasing slightly towards negative: -1.6% versus -1.5% in the last print. This is the first negative quarter of GDP growth since the tumultuous Covid-related shutdown in the second quarter of 2020.

At the time, the two months of negative GDP growth (Q1 2020 was -5.1%) was a technical recession, but that was it – very short-lived. Depending on how Q2 plays out (and Q2 GDP numbers won’t start coming out for another month), particularly in terms of growth in the energy sector, we could see our second technical recession in two year.

Other subtitle numbers look like this: final demand +2.0% (before +2.7%), consumption +1.8% (+3.1% last time), gross domestic income +1 .8% (+2.12% before). Quarter-over-quarter core spending (excluding volatile food and energy prices) edged up to +5.2% from a lower-revised +5.0%. This is still a high figure, but fortunately far from the +6.1% observed in June of last year.

Tomorrow we will see the full compliment of Personal Consumption Expenditure (PCE) figures – well known as the Fed’s favorite inflation barometer – for the month of May. Last time we saw year-over-year numbers of +6.3% on the stock, +4.9% on the core. This base figure is lower than the +5.2% observed in March. Core PCE inflation month-over-month is expected to be +0.4% – higher than +0.3% in the prior month.

Over the Atlantic this morning, the last European Central Bank (ECB) conference is just beginning at this time. ECB President Christine Lagarde, Bank of England President Andrew Bailey and US Fed President Jerome Powell will address central bankers in the eurozone and beyond. If here in the US we are worried about recessionary conditions, the EU – with its proximity to the war in Ukraine, among others – is almost certainly headed for negative growth.

Questions or comments about this article and/or its author? Click here>>

Zacks names ‘only one best choice for doubling up’

From thousands of stocks, 5 Zacks experts have each picked their favorite to skyrocket by +100% or more in the coming months. Of these 5, Research Director Sheraz Mian selects one to have the most explosive advantage of all.

It’s a little-known chemical company that’s up 65% year-on-year, but still very cheap. With relentless demand, rising earnings estimates for 2022 and $1.5 billion for stock buybacks, retail investors could jump in at any moment.

This company could rival or surpass other recent Zacks stocks which are expected to double, such as Boston Beer Company which jumped +143.0% in just over 9 months and NVIDIA which jumped +175.9% in one. year.

Free: See our best stock and our 4 finalists >>

Click to get this free report

Invesco QQQ (QQQ): ETF Research Reports

SPDR S&P 500 ETF (SPY): ETF Research Reports

SPDR Dow Jones Industrial Average ETF (DIA): ETF Research Reports

To read this article on Zacks.com, click here.

Zacks Investment Research

Want the latest recommendations from Zacks Investment Research? Today you can download 7 best stocks for the next 30 days. Click to get this free report

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Maria R. Newman