Q1 GDP Commentary from MBA's Joel Kan

The following is MBA VP and Deputy Chief Economist Joel Kan’s reaction to this morning’s U.S. Commerce Department report on Q1 GDP:

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“GDP growth in the first quarter at 1.6 percent not only was a cooldown from the strong pace reported in the second half of 2023 but was also the weakest quarterly growth rate since mid-2022.

“The details in the report indicated that growth last quarter was driven heavily by service sector spending, as consumer spending continues to be supported by a strong job market. Residential investment had its strongest quarter in four years, as new housing construction remains supported by housing demand and a lack of resale inventory. There was also a surprisingly strong reading of core PCE inflation. However, this persistence in higher than desired inflation will leave the Fed in no hurry to cut rates. As indicated in our April forecast, we expect potentially two rate cuts in the latter part of this year.”