2012.04.2709:43:00UTC+00Us Economy Contracts Further in Q1 on Inventories and Weak Business Spending

 News

• US GDP rose 2.2 pct in the Q1 down from 3 pct growth of Q4, missing expectations of a growth for 2.5 pct
• US consumer spending increased at a 2.9 pct rate compared to a 2.1 pct rise in the Q4
• Business spending fell at a 2.1 pct form a rise of 5.2 pct in the Q4 of 2011
• Motor vehicle output contributed 1.12 pct points to Q1 GDP growth.
• Inventories also helped GDP growth with inventories increasing $69.5 billion after rising $52.2 billion in the Q4
• Excluding inventories, GDP rose at a 1.6 pct from 1.1 pct in the Q4

Quotes

   "GDP was worse-than-expected and that increases the chances of the Fed launching QE3. Markets shrugged off the Spanish rating action and we could see risk assets continue upward momentum on expectations of a Fed move. This is negative for the dollar as it increases QE3 chances. Some of the other data may offset GDP a bit and we could see some back-and-forth action today." 

 Daniel Hwang, Senior Currency Strategist, Forex.Com, New York