GDP shy, inflation stays hot

Kim Khan· Host0:00

[upbeat music] Welcome to Seeking Alpha's Wall Street Lunch, our afternoon update on today's market action, news, and analysis. Good afternoon. Today is Thursday, April thirtieth, and I'm your host, Kim Khan. Our top story so far, the first look at Q1 growth came in shy of forecasts, while inflation remained firmly above target. But the labor market delivered a once in a half-century surprise. Q1 GDP rose at a two percent annual rate, below the two-point two percent consensus, but up sharply from zero-point five percent in Q4, which was weighed down by the government shutdown. Inflation accelerated. The quarterly PCE price index rose four-point five percent, above the four-point one percent consensus, and up from two-point nine percent in Q4. Core PCE increased four-point three percent, also topping expectations. For March, core PCE rose zero-point three percent, with the annual rate at three-point two percent. The core PCE price index is currently the Fed's favorite inflation gauge. Oil prices tied to the Iran conflict boosted inflation pressures while consumer spending growth cooled. Mark Zandi of Moody's said unless the war ends soon and oil prices fall materially, growth in the current quarter could weaken and recession risks could rise. Economist Joseph Brusuelas called the data an echo of what might have been, arguing that a huge tax cut and AI-led investment tailwinds have been partially offset by what he described as an adverse supply shock from the Iran war. Markets reacted quickly. Treasury yields reversed much of their post-Fed gains, and Fed funds futures shifted back towards pricing in better odds of