US, the sting of austerity - Nomura

FXstreet.com (London) - Economist Ellen Zentner at Nomura said that the Q1 GDP data continue to paint the picture of an economy with strengthening fundamentals that is facing significant fiscal drag - a "tug-of-war" as New York Federal Reserve Bank President Dudley recently characterized it.

The Bureau of Economic Analysis (BEA) revised its original estimate of Q1 GDP growth to 2.4% from the originally reported 2.5% (annual rate). Ellen Zentner said that the revision was very small compared with the historical norm of +-0.5 percentage points (pp) from the advanced to second reading. Adding, though the revision was downward, the underlying dynamics were more positive for current quarter growth.